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Why RFID Is Essential in Retail

There is no way to get inventory accuracy up to 95 percent or better without the technology—and if your inventory accuracy is low, shoppers will simply go elsewhere.
By Mark Roberti
Aug 28, 2017

After my column last week was published, I received an email from a subscriber who asked, "Do you think RFID is essential for all retailers? That is, do you think we will all have to invest in RFID?"

"All" is an absolute term, and it would be difficult for me to say categorically that every single retailer on the planet will need to use RFID. There are always exceptions. But I would say, with certainty, that the vast majority of retailers will, indeed, need to use radio frequency identification technology.

I say that for the simple reason that it is very difficult, if not impossible, to get inventory accuracy up to 95 percent or better without RFID. You could hire more employees to perform inventory counts every day, but labor is expensive in most places. Even if you could hire more workers to count inventory, people scanning bar codes are still not as accurate as RFID. Studies show that people become tired and lose focus. The more you ask employees to do a boring, repetitive task, the more quickly they will lose focus. As such, you could likely achieve only 85 percent inventory accuracy with workers scanning bar codes.

Is 85 percent inventory accuracy sufficient? Not if you want to accomplish true omnichannel retailing and allow customers to buy items where, how and when they want. That's because you need inventory accuracy down to the last item to be able to show 100 percent of your inventory to shoppers online, and you need extremely high inventory accuracy to be able to ensure that when a customer buys an item online and picks it up at a store, that product will actually be available when he or she arrives.

The worst mistake a retailer can make is to tell a customer he or she can pick up an item online and then not have it at the store. That is happening, and it is costing retailers customers. In fact, I would argue that the popularity of online retailing is a direct result of the poor quality of in-store inventory. Customers are tired of going to a store and not finding what they came in for. I have written about my own frustration with this on a couple of occasions (see Sorry, It’s Out of Stock and Is This What Passes for Retailing?).

There was a time when people enjoyed shopping. They would go to stores and try things on and socialize with friends. Millions of people around the world still do this, but millennials (a term that generally refers to those born between 1980 and 2000) and Generation Z (those born after 2000) do this less than previous generations. One reason is that they've grown up with the Internet and smartphones, as well as the ability to order online and have the right item delivered within a day or two. They find it, frankly, absurd that they can't find what they are looking for at a store.

So the first thing retailers need to do is to get their inventory accuracy up so they can deliver a good instore experience. Then, as I argued a few weeks ago, they need to improve service and provide expert advice. They need to make shopping in stores a better, easier, more rewarding experience than buying everything online. I simply don't see how you can do this without RFID.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.

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