Retailers Recognize the Problem—Not the Solution

By Mark Roberti

A study conducted by Retail Systems Research indicates that retailers have in-store issues that RFID can solve, but they don't seem aware of what the technology can do.


I recently received a May 2012 report titled “The 2012 Retail Store: In Transition,” from Retail Systems Research (RSR), that made for very interesting reading. The authors, Paula Rosenblum and Steve Rowen, RSR’s managing partners, discussed the changing nature of retail, explaining that competition is no longer a matter of whether a store down the street has nicer items at a lower cost.

“For most retailers,” the authors wrote, “competition comes from places they don’t even know about, and often for reasons they can’t easily understand. Thanks to the Internet and mobile technologies’ ability to put the global marketplace in the hands of virtually any consumer at all times, it is very difficult to gauge not only who and where your competitor is, but what makes them a competitor in the first place.”

Interesting. The authors went on to ask, “What component of the retail experience does a specific customer care most about at any given moment? In fact, what motivates one customer to take the time and effort to visit a physical store is likely to be very different from that of the next customer coming through the door. Consumer expectations are very different than they once were.”

The study asked retailers for the top uses of in-store technologies. Their answers:

• Maintain and/or improve the customer experience (52 percent)

• Put actionable information into the hands of managers (43 percent)

• Increase revenue while holding down operational costs (41 percent)

• Help the company win new customers and retain current customers (41 percent)

• Create competitive advantage and new sources of revenue generation (30 percent)

• Make our employees “smarter” and better informed (29 percent)

RFID can, of course, address all of these issues.

The study also asked, “What are the top business challenges that retailers face?” Here are the answers, for both “winner” and “laggard” categories (though I’m not entirely sure what “winners” and “laggards” constitute in the context of the question):

• Need for more consistent store execution/employee productivity (68 percent of “winners” and 33 percent of “laggards”)

• Need to improve customer service while holding the line on payroll costs (47 percent and 39 percent, respectively)

• Store managers lack information they need on the selling floor—too much time spent in the back room (37 percent and 17 percent, respectively)

• Lost sales due to store out-of-stocks (32 percent and 11 percent, respectively)

• Customer dissatisfaction caused by lack of integration between the store and other selling channels (26 percent and 22 percent, respectively)

What’s interesting, again, is that radio frequency identification can address all of these issue. For the integration of sales channels, RFID is essential to providing the inventory visibility required to allow someone to order products online and pick them up at the store.

The authors further asked, “What organizational inhibitors are preventing retailers from adopting new in-store technologies?” Here are the responses:

• The existing technology/infrastructure is preventing us from moving forward with new solutions (59 percent)

• Hard to quantify technology return on investment (55 percent)

• Overall capital requirements—we never even get to the subject of ROI (39 percent, down from 61 percent a year earlier)

• We are trying to simplify our in-store technology, not make it more complex (35 percent)

• We’re conflicted as to whether new technologies will be tools or distractions (29 percent)

• We generally don’t want to be an early adopter of new technologies (24 percent)

But here’s what I find the most interesting—and the most baffling: The authors asked, “What are the top five technologies with the potential to deliver value in the store?” and yet, RFID wasn’t on their list. In fact, the report didn’t mention RFID at all. RFID could solve most of the problems and help retailers achieve most of what they want to achieve, yet it’s not even part of the discussion.

It’s unclear what types of retailers were included in the study. The report offered a breakdown of size and geography, but not an indication of how many sell apparel, electronics, sporting goods, pharmaceuticals and so forth. So it’s possible that the apparel retailers were aware of RFID’s potential, while the others were not. But it is very surprising that a study like this would not even touch on something as important to the equation as RFID. Clearly, we have a lot more educating to do.

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.