Benefits of RFID in Retail – Part 1
For many, the proven benefits of RFID in retail are compelling, yet retailers want to make sure they implement the technology in a way that fully realizes the promise of RFID technology. In this three-part series, we will explore and discuss the benefits of RFID in retail, use cases in the retail apparel market, and how best to leverage the technology for maximum success.
Winning in Retail in the Connected Age
Without a doubt, we are living in the age of the connected consumer. In fact, more than half of the consumers surveyed in a recent worldwide study said they are connected to the Internet nearly every waking hour.
Many retail shoppers enjoy the convenience, speed and 24/7 access of the online experience, and the always-connected consumer moves easily across different platforms… from the desktop web browser, to a tablet mobile app, to instant chat on a smartphone. For retailers, the 24/7 connected lifestyle is ushering in a universe of opportunities to reach customers anytime, anywhere.
However, always-on connectivity presents an array of challenges as well, creating the expectation of a seamless customer experience across all channels and platforms. This omni-channel experience is particularly challenging for brick and mortar retail stores, putting them at a significant disadvantage to online retailers.
With the help of big data analytics and Internet search algorithms, online retailers are able to amass huge databases of information about customers’ likes and dislikes, their shopping habits and purchase histories. Armed with this intelligence, online sellers can successfully target their marketing to individual prospects with laser-like precision.
In an effort to remain competitive, many brick and mortar stores are launching an online component to their business as well. The key to winning with this strategy, however, is the ability to successfully create a seamless omni-channel customer experience.
All Channels, All the Time
Although many online retailers have been steadily increasing revenue with the help of big data, physical stores have an advantage that e-tail stores simply don’t have — the appeal of immersive, sensory experiences. Enticing customers to touch and feel products in-store provides a pleasurable experience that converts shoppers into buyers. Even the most connected consumers still enjoy the opportunity to handle products, or try-on apparel to find the best fit, with nearly half of shoppers worldwide preferring to shop in-store.
Nonetheless, the consumer’s relationship to the brick and mortar retail store is subtly changing, as products become incidental to the immersive brand experience. Today’s customer expects a seamless online experience even while in the store, using smartphones to compare prices online or share images with friends via social media. And shoppers want to extend this retail relationship even after leaving the store, with more than 80 percent of U.S. consumers in a recent survey saying that they want to receive communications from a retailer following an in-store visit.
Savvy retailers know that every customer touch point is an opportunity to create value, improve satisfaction and increase both customer loyalty and sales. The key to retailers being able to fully exploit their physical store assets to gain advantage over online competitors lies in their ability to seamlessly integrate all aspects of their business, blending online and in-store shopping experiences to create a richer engagement across all channels and platforms.
Benefits of RFID in Retail: Real-Time Visibility
Omni-channel execution doesn’t happen overnight, however, and it takes more than a website and a few clever in-store gimmicks to be successful.
The most impactful element of a retailer’s omni-channel strategy is their order fulfillment process. True omni-channel fulfillment allows customers to place orders from anywhere and take delivery wherever and whenever they choose for immediate gratification. This degree of personalization and control elevates the seamless experience to a whole new level, improving customer satisfaction, reinforcing loyalty and often resulting in increased revenue through up-sell opportunities. For example, many customers who order online spend more than they had planned when they pick up their purchase in-store.
Yet without accurate data about their own store inventory, a retailer may find that their “click and collect” fulfillment strategy is omni-channel in name only. When a customer arrives to pick up an order, only to find that it isn’t available as promised, a retailer stands to lose more than a sale; their brand’s reputation and customer loyalty are both at serious risk.
Unfortunately, this is a very real scenario for many retailers who lack real-time inventory visibility. For those retailers taking stock counts several times per year, inventory data is wrong more often than it’s right. On average, accuracy declines by 2 to 10 percent per month between counts due to replenishment errors and undetected shrink, as well as shipping and receiving mistakes.
In order to address deficiencies in their inventory management, more and more retailers are turning to radio frequency identification (RFID) technology, which does not need direct line‐of‐sight to read hangtags, like barcode systems require. Now, more than a dozen years after Walmart began using RFID, the technology is accepted as delivering real benefits to retailers. This is despite early missteps when the retail giant deployed the technology solely to track shipments in the supply chain but not inventory in the store, failing to capture the key benefits of RFID technology in retail.
In part two, we will look at best practices for implementing RFID to improve inventory management.