For years, the promise of radio frequency identification, or RFID, was just that – a promise. But with the costs associated with tags falling, and the real need for better inventory visibility and control increasing, there is real strength in RFID as a technology and as a business. A strong case in point is retail.
Walmart initially led the way with investments in the supply chain nearly a decade ago – tagging cartons and pallets to speed up distribution. Today, new deployment models being implemented by American Apparel, Lord & Taylor, and others are bringing RFID to the item level and delivering unprecedented visibility to retail inventory, increasing revenues and reducing shrinkage. All of these benefits are vitally important to retailers looking to build profitable businesses in this omnichannel era.
Satisfying Customers the Omnichannel Way
Omnichannel retailing is quickly changing how we view retail stores. Traditional brick-and- mortar retailers need to turn products quicker and facilitate customer engagement across a variety of digital touch points. To do that, they have to know what they have in stock at all times. Now many retailers are taking on expanded roles, functioning not only as a storefront, but also as a shipping fulfillment center. Item-level RFID is helping omnichannel retailers meet the challenges of these new roles and creating competitive advantage in the process.
Macy’s is using RFID technology to maintain an accurate inventory of items with the greatest turnover rate in the store. Better inventory accuracy and insight of where those items are located is improving in-stock positions and increasing sales. Other retailers are using the technology in shoe departments to ensure compliancy. You can’t sell shoes without a representative sample of stock on the sales floor at all times. In most cases, Macy’s found 20-30 percent of shoe samples were not found on the sales floor, eliminating the opportunity to sell those styles. Implementing RFID changes all that, providing product inventory and location data that is up to 99.5 percent accurate.
So, what does a successful omnichannel customer experience look like with RFID? Here’s one of many possible scenarios.
On the train during her Friday afternoon commute home, Jessica leafs through the catalog she received in the mail the day before. In it, she finds the perfect sweater to go with the pants she’s wearing to a party tonight. Grabbing her smartphone, she visits the store’s mobile website to see if the location near her home has the sweater. The store’s item-level RFID tagging system provides an accurate inventory status to the website, allowing Jessica to find that her size is available and in stock. She purchases the sweater and arranges to pick it up from the store on her way home. When she arrives, her purchase is waiting; her outfit is complete.
Today’s RFID technology improves inventory management, customer transparency of that inventory, and most important, provides accurate product availability data that is vital to sales. According to the American Apparel & Footwear Association, a typical retailer’s inventory is only about 65-70 percent accurate – a fact fueling the RFID tipping point for many.
Generating Greater Efficiencies and Control
Inventory accuracy was a catalyst for Macy’s RFID initiative, as well as for other global retailers now rolling out the technology. As brick-and-mortar stores become more integral to omnichannel supply chain operations, inventory visibility and management become even more critical. Retailers must meet the expectations of in-store customers who want to find exactly what they want on the sales floor, as well as those customers who want items purchased in-store, at an outlet, on a mobile app, or online shipped directly to their home.
Empowering Customer Transparency
Visibility has always been important to inventory management. But it traditionally involved keeping store associates and management informed of in-store inventory levels – a manual, labor-intensive process that takes days or weeks and many people to accomplish on an annual basis. RFID is changing that paradigm. Not only can the technology drive improvements several orders of magnitude better than current standard methods, but it now offers customers a glimpse into that inventory wherever they shop.
Ensuring Accurate Availability
A customer wants to order a specific item to be picked up at the store. The store’s inventory shows two items are available. But are they really? Without RFID, it’s hard to tell because that number is likely based on point-of-sale data that may not be accurate or timely. There’s no way to ensure the item is actually available. It could be on the shelf, in a dressing room, or may even be in the wrong location. RFID ensures retailers’ inventory is accurate, as it helps them count faster, count more frequently, and can provide additional benefits such as accurate product locationing, which in turn gives them the confidence to share that inventory information with their customers for flexible fulfillment.
Edited by Adam Brandt