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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.
By Mark Roberti
Jun 18, 2012For 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.


Retailers lack a high volume of data regarding goods' movements from their warehouse to the back of a store, and then on to shelves. Bar codes are not usually scanned when items arrive at a warehouse, when they are shipped to a store, when they arrive at that store, when they are put away at a particular location, and when they are then picked and moved to the store floor. As such, the retailers often have no idea how long these processes take to complete, or how well the stores are executing these tasks.

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.

USER COMMENTS

Tilak Dias 2012-06-22 01:45:19 AM
RFID and Data-Driven Retailing Hi, I find this interesting. However, I think the real potential of RFID tagging in apparel is when the RFID chips are fully integrated into the textile structure in an unobstrusive manner; i.e. within the fibres. Is this feasible. Thanks.
Jessica Saila 2012-06-27 02:15:16 PM
Definitely the 2nd phase of item-level RFID Mark, thank you for starting the discussion on this aspect of RFID! I agree 100% with the level of information available and in fact spoke to a number of retailers about this aspect already. A recent study by the Turku School of Economics suggests that the first phase of item-level RFID implementation aims to serve the SCM as well as selection / inventory related matters and the second phase is driven by the use of data gathered and the turning of data into knowledge. The third phase, with only a handful of retailers so far in it, is likely to hold a lot of marketing / consumer interaction apps as well as new channel structures. I found what you said here very much in line with that study. Br, Jessica @ Nordic ID

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