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Aberdeen on RFID Adoption in Retail

Aberdeen Group has released the latest installment in a series of reports on RFID adoption. Entitled , the report is available free for a limited time. Report author Russ Klein herein summarizes the key findings of best-in-class retailer end users and makes recommendations for other retailers to follow.
Tags: Retail
Apr 13, 2007This article was originally published by RFID Update.

April 13, 2007—Retailers are notoriously cautious when it comes to adopting new technology and upgrading core infrastructure. Yet Wal-Mart has almost single-handedly catalyzed the RFID industry with its mandates and broad implementation of auto-ID. Some smaller retailers with less influence over their supply chain partners have experimented with RFID; but Wal-Mart's early success is difficult to translate and does not serve as a useful roadmap for them. In a competitive and cost-sensitive industry such as retail, customer satisfaction and inventory visibility are crucial to profit and growth. This new report from Aberdeen is a roadmap for the rest of the retail community who desire to achieve those goals through best-in-class use of RFID.

Best in Class Performance

Aberdeen used four key performance criteria to distinguish Best in Class companies. These key performance indicators (KPIs) are reduced inventory replenishment time, fewer markdowns or less inventory spoilage, fewer incidents of theft, and shorter lines at the point of sale. Best-in-class retailers showed improvement in all four areas averaging:
  • 30% decrease in inventory replenishment time
  • 42% fewer incidents of theft
  • 25% less customer wait-time at the point of sale
  • 25% reduction of merchandise spoilage or price markdown
Competitive Maturity Assessment

Survey results show that the firms enjoying best-in-class performance shared several common characteristics with respect to their RFID implementation strategy, such as:

  • Best-in-class retailers are nearly 4 times as likely as the rest to offer customers a self-service method to query current inventory and retrieve detailed product information.
  • 73% of Best-in-Class retailers who are using RFID have staff familiar with the technology devoted to studying further business process improvement opportunities.
Required Actions

In addition to the specific recommendations in chapter 3 of this report, to achieve best-in-class performance, retailers must:
  • Integrate RFID data into business intelligence, CRM and inventory management systems to produce holistic, real-time enterprise visibility.
  • Adopt an RFID strategy balancing short-term profitability goals with a long-term strategy of business innovation and consistent, unmatched customer service.
The full report, available free on Aberdeen's website until June 1st, discusses each of these points and many others in detail.
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