How RFID Is Impacting Retail’s Bottom Line

RFID solutions for retail

July 14, 2016

RFID solutions are becoming mandatory for brick and mortar retailers

Radio frequency identification (RFID) technology has been around for decades. Where once it was described as “a solution looking for a problem,” the rapid development of online shopping has made RFID solutions mandatory for brick and mortar retailers. In addition to eliminating traditional headaches with stockouts, RFID is having a direct impact on company bottom lines because of this new competitive retail landscape.

Inventory Management

Inventory management is the fundamental back office function. While it may not receive as much attention as e-commerce, electronic payment and consumer mobile, its development yields significant bottom line benefits.

Major retailers such as Walmart, Marks & Spencer, and even Amazon, noted for their global presence and steady emphasis on delivering low prices, state outstanding supply chain and inventory management are a key reason for their success. A big part of that success is coming from the introduction of RFID technology.

RFID allows retailers to identify an item’s UPC, or SKU number the same way bar codes have traditionally done, but now individual items can be uniquely distinguished, making it possible to count inventory in seconds, without handling individual items and without even being able to see every item, RFID operates wirelessly, with richer data and without need for a line of sight. These fundamental benefits save time, reduce errors and allow more frequent stock takes, greatly improving inventory accuracy.

RFID was a key success factor in Macy’s successful omni-channel strategy, announced in 2011. “RFID enables frequent [inventory] counting, which enables inventory accuracy. You can’t be great at omni-channel without having high confidence at the store level, at the size and color level,” said a senior spokesperson in logistics and operations at Macy’s, a pioneer of RFID in retail. “You can count inventory once or twice a year with bar codes with limited accuracy, because the person can be distracted or scan the same code twice,” Macy’s explained. “We can count up to 24 times a year using RFID. It just enables us to keep inventory accuracy in the high 90s [in terms of percentage].”

Once items are tagged for in-store purposes, RFID benefits extend into the supply chain. The modern warehouse is far more than just a facility in which to store inventory. By leveraging the power of RFID technology, the modern warehouse can now serve as a hub to boost efficiency and speed throughout the entire supply chain. RFID is also enabling faster, more accurate delivery times to customers, increasing loyalty and reputation by improving the customer experience.

Customer Experience

According to RFID expert Bill Hardgrave, dean of Auburn University’s College of Business, RFID technology helps retailers much more significantly on the sales floor than in their supply chains. This is especially true with apparel, which thanks to multiple size and color combinations can be troublesome to keep properly stocked.

“Stores are chaotic. The processes are not repetitive; customers don’t behave the same way every day; the weather isn’t the same every day and that impacts buying patterns. So this is where RFID has the most value,” Hardgrave explains.

Despite the rapid growth of online shopping, customers still value actually seeing and touching merchandise before purchasing – an experience unique to brick-and-mortar stores. When brick-and-mortar retailers add the cutting-edge benefits of RFID technology, they help close the all-to-common gaps in service, providing the information and inventory of traditional retail, while opening up more opportunities for sales and customer satisfaction.

Much like the online shopping experience, brick-and-mortar retailers with an RFID solution can greet customers by name, impress them with a wider selection of merchandise, and better serve them with faster assistance, deeper product information and more personalized promotions. What’s more, those retailers can also add social media to the traditional shopping experience with RFID enabled kiosks that allow customers to interact with their social network.

Additionally, the RFID infrastructure that helps create this targeted customer experience can also enable the retailer to improve inventory management by tagging goods to monitor out-of-stocks and increase cross selling. Longer-term impacts from the use of RFID customer loyalty cards can be achieved by delivering personalized content and offers that make customers feel engaged and connected to the brand.


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