How Vastly Could RFID Bring About Change in Retail?


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Ask The ExpertsCategory: QuestionsHow Vastly Could RFID Bring About Change in Retail?
Matt Fraanje asked 2 years ago

What impacts would we see if the technology were used to its fullest capabilities in the industry?


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The changes would be enormous. First, in-store product availability would go from an average of about 65 percent to better than 95 percent. Sales would rise immediately as a result of retailers having product on shelves when customers want to buy it. Retailers would also be able to create new, interactive displays that engage customers. For example, they could create shelves with a video display, so that when someone picked up an item, an RFID reader in the shelf would identify it and play a video.

Having high confidence in inventory accuracy would let retailers show more store inventory to customers shopping online. Macy's, for example, will show inventory as available in a local store if it has one item left because it uses RFID to take inventory counts every two weeks. Other retailers only show items when there are three or even five left, because they don't have confidence in their inventory and don't want customers to show up and not find what they are looking for. This allows Macy's to sell more products online because it is showing more items to customers.

RFID enables "buy online, pickup in store" (BOPIS) and ship-from-store. Retailers have struggled to locate items in their own stores and often wind up canceling BOPIS orders because they can't locate items. They also end up shipping items from several stores, which reduces margins on ship-from-store orders. RFID tells you what's in the store and allows you to find it quickly and fulfill these orders. It enables retailers to better track theft by employees and is being used to combat organized retail theft. Joe Coll, Macy's VP of asset protection operations and strategy, spoke about this at RFID Journal LIVE! 2022 (see Using RFID to Bring Down Organized Retail Crime).

Additionally, RFID would provide a wealth of data that enables retailers to order more effectively. Sometimes an item doesn't sell because it's not popular. Other times, a popular item is stolen, which can lead to frozen inventory (a replenishment order is never triggered because the system thinks goods are still on the shelf). Items that are extremely popular might not seem so if the staff doesn't realize those products have all been sold and replenish them in a timely way. RFID provides accurate data, allowing retailers to know precisely what's going on in the store, and it provides good data for merchandisers to order more or less of an item going forward. RFID can even tell you which clothing items were tried on often but didn't lead to sales.

In short, RFID enables retailers to undergo a complete digital transformation. We produced a white paper that explains step-by-step how retailers can use RFID in this way (see How to Succeed in Retail in the 21st Century: A Guide to Digital Transformation for Brick and Mortar Retailers). I believe that RFID will be an essential tool for all retailers going forward. The old ways of doing things, with poor inventory data and poor inventory accuracy, just won't cut it anymore.

—RFID Journal


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