RFID and Data-Driven Retailing
Businesses run on data, and RFID allows retailers to collect a wealth of information cost-effectively, enabling them to better manage their operations.
Jun 18, 2012—For last week's article about Impinj's new store simulation system (see Impinj Releases RFID Store Performance Simulator), I interviewed Larry Arnstein, the company's VP of business development. One thing he said struck me: "The larger message here is that retail has to become more data-driven."
Retailers might believe that they already collect a lot of data, but the reality is that scanning bar codes requires labor, which is expensive. Because it costs so much to collect information via bar codes, retail companies typically conduct inventory counts only once or twice annually—and the data they do have is often wrong. For instance, inventory accuracy for apparel stores averages just 65 percent. But the problem goes beyond inventory accuracy.
Here's something else that retailers don't know: whether an item didn't sell because it was unpopular with shoppers, or because it was not out on the shelf when consumers came in to buy it. This really is one of the most fundamental questions for retail firms, but they are unable to improve merchandising since they can't accurately measure success and failure, or the causes of failure.
Every MBA student learns the old maxim that "You can't manage what you can't measure." And if you can't collect data, or acquire accurate information, you can't measure success. An item-level RFID system can deliver all of the data that retailers require.
I like the fact that Impinj's Store Performance Simulator can help retailers begin to understand the impact not just of RFID technology, but also of adding additional service labor or inventory-management labor, or of shortening their supply chain. Instead of spending tens of thousands of dollars to test results in the real world, they can simply perform a virtual simulation.
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