From inventory tracking and control to curbing loss and reducing costs, RFID could be a game-changer.
Radio Frequency Identification Technology (RFID) has been slowly making its way into retail for years, but in a 2016 RFID in Retail Study, nearly 75 percent of surveyed retailers reported currently implementing or piloting RFID technology, with more retailers discovering its potential. In fact, 90 percent said they were measuring their return on investment (ROI) by inventory accuracy with an average improvement of 25 percent. RFID automates merchandise tracking throughout the supply chain, replacing the manual scanning of products by employees.
The current trends suggest that RFID could be a potential game-changer for retailers, from inventory tracking and control to curbing loss and reducing costs. The technology can have a positive effect on sales and online cart abandonment, pricing, and even in-store customer service, and it has the potential to revolutionize the entire retail industry.
Retailers like Bon-Ton and Macy’s have already incorporated the use of RFID Technology in their stores with positive results. Bon-Ton’s handheld RFID management platform helps improve the customer experience, allows for quick and efficient restocking of merchandise, and increases sales, as Retail Insights reported.
Macy’s also has implemented RFID technology in its stores, and Bill Connell, senior vice president of transportation, store operations, and process improvement told Forbes, RFID “is not a project, it’s very much integrated into how we do business.” Macy’s has a goal of tracking every item across its entire fleet of stores and fulfillment centers by the end of 2018, and Connell says, “We are already halfway to this goal of tagging 100% of products.”
“With an increase in the inventory accuracy, out-of-stocks are significantly reduced,” he said. “And by cutting the out-of-stocks, item availability is increased, which can lead to substantial and measurable sales increases.”
Inventory accuracy and the resulting benefits are seen as the largest benefits of RFID, as it raises inventory accuracy from an average of 63 percent to 95 percent, and reduces retail out-of-stocks by up to 50 percent, according to the RFID Lab at Auburn University.
While the use of RFID is not new in retail, it is an important tool for cutting costs and managing efficiencies at a time when retailers are battling fiercely for each consumer dollar spent at their stores. By reducing out of stocks and overstocks, retailers can help maximize product availability to help convert sales.
Inventory management using fixed RFID readers provides accurate, real-time inventory data, which benefits retailers in terms of revenue and gross profit uplift, shrinkage and more. This is why many retailers are implementing an item-level tagging RFID solution for inventory tracking.
RFID can generate information that can be combined with other store-level data and provide valuable insights in areas including demand forecasting and merchandise trends, dynamic pricing, fitting room utilization and conversion, merchandise placement and in-store marketing.
According to Steven Platt, director of the Platt Retail Institute, RFID data is arguably the “single most important merchandise-related information available” to help retailers improve the relationship between customers and products.