Apr 28, 2013In my column, Move to 0HIO, I discussed a common mistake retailers make: substituting RFID for bar-code technology and keeping the same manual processes in place. But automating processes to reduce mistakes and improve efficiencies is just the first step. To truly benefit from RFID, retailers must move beyond incremental improvements and use the technology to introduce innovations.
Take Retailer X, for example, which wanted to better understand its customers' needs and shopping habits. A few years ago, Retailer X created a process to gain insight into the clothes customers tried on but didn't purchase. Any items taken to the dressing room were held there until the end of the day, at which time a store associate would bar-code scan every item. It was a laborious process that usually took a couple of hours. In addition, the retailer was missing potential sales opportunities, because those items were kept off the sales floor.
Recently, Retailer X conducted its first RFID pilot to improve inventory accuracy. But it used the same process to monitor items left in the dressing rooms. Instead of bar-code scanning the items, a store associate used an RFID handheld reader. This took significantly less time—a few minutes rather than a couple of hours—but that was the extent of the improvement. The same data was collected as before.
The retailer missed a great chance to create a whole new process that would have delivered more valuable data and sales opportunities. If, for instance, the retailer had installed RFID portals near the dressing rooms, it would be able to monitor all items going into and coming out of the dressing rooms—and any items not purchased could be returned to the sales floor. That data could be married with point-of-sale data, so the retailer could determine the conversion rate of items taken into the dressing rooms—impossible to know with the existing process.
As an alternative to portals, RFID antennas could be installed in each dressing room, providing the opportunity to understand the "basket" of items customers consider. An interactive display, sometimes called a magic mirror, could be added to each dressing room. It could read the RFID tags on the items the customer tries on, and then display related information, such as other available colors and sizes, accompanying accessories or garment care instructions.
There are many more examples, but I'm sure you get the idea. Using RFID opens up an amazing number of possibilities—but only if a retailer is open to viewing the technology as a way to do things that have been difficult, if not impossible, to do with existing technology. Sure, you can use RFID to make incremental improvements, but don't let your thinking go there immediately. It's time to think process enablement, not just process improvement.
Bill Hardgrave is the dean of Auburn University's College of Business and the founder of the University of Arkansas' RFID Research Center. He will address other RFID adoption and business case issues in this column. Send your questions to hardgrave@auburn.edu.
