The retail environment has never been more demanding than it is today, thanks to fierce competition, the growth of e-commerce, and consumers’ high expectations for seamless shopping experiences. It’s a situation made even more difficult by a lack of inventory visibility, the complexity of supply chains and the sheer variety of products brands are faced with.
While retailers have access to a growing number of solutions to these issues, RFID (Radio Frequency Identification) is the only one that’s proven to consistently meet retailers’ needs for leaner processes, accurate inventory and real-time data analytics.
This webinar covers:
• The five most important needs identified by retailers and their effect on business
• How RFID-based systems and processes can be applied to solve each need
• What financial and operational benefits can be gained by doing so
• How retailers can further unlock the power of RFID to offer a truly seamless and connected shopping experience
RFID in Retail at a Glance
What is RFID?
RFID (Radio Frequency Identification) uses radio waves to track and identify tags attached to objects. The tags contain electronically stored information and are counted or ‘read’ by either handheld or fixed RFID readers.
How is RFID used in Retail?
In many ways RFID is used in retail as an alternative to a barcode system (although it doesn’t have to replace barcodes entirely). The more advanced technology involved in RFID mean it has a far greater level of accuracy and efficiency when it comes to counting inventory. As a result of this it has far broader applications in retail, most of which are built of off the back of this reliable inventory visibility.
What is the financial benefit of RFID for retailers?
By implementing RFID retailers can on average increase their revenue from 5-15% depending on the business. This on top of a margin increase of up to 1% and 10-15% lower working capital due to optimised inventory levels.
How common is RFID in Retail?
According to research in 2018, 69% of retailers cite a significant level of adoption, and this number is continuing to rise.
The 6 Key Benefits of RFID in Retail
Due to the ease and accuracy of RFID stock counts, retailers using the technology can reliably achieve full item-level inventory visibility across their stores and supply chains. Crucially, due to the speed of RFID inventory counts, this can be achieved whilst actively reducing the labour intensity of operational processes. This accurate and up-to-the-minute inventory information is the backbone of so many of RFID’s uses in retail (including many of the points discussed below).
One crucial aspect of modern retail that relies on having accurate inventory visibility is Omnichannel retailing. With a complete and up-to-date view of stock across all channels, it is possible to open up the inventory of your entire store network to customers, providing a better customer experience and increasing sales.
Benefits of item-level inventory visibility
- Improved shipping accuracy
- Excellent baseline for advanced omnichannel retailing
- Produces more data for better insights
- Reduces inventory size (and therefore working capital) significantly
- Increased customer satisfaction from reduced out-of-stocks and a more connected experience
Increasing Product Availability
Ensuring a high product availability is vital to maintaining retail sales. Despite this, low on-floor product availability and out-of-stocks are an alarmingly common problem in the industry, causing unnecessary lost sales as a result of inefficient replenishment processes and stock inaccuracy. This latter cause is practically removed completely by RFID, with typical stock accuracy being increased to 99% from the standard 60-80%.
Additionally, RFID platforms provide an unbeatable basis for efficient and reliable replenishment processes. The main advantage these platforms have is the item-level and real-time inventory visibility gained from regular 99% accuracy stock counts.
How does RFID increase product availability?
- Makes regular cycle counts possible with efficient RFID stock reads
- Removes stock inaccuracy (from 70-80% to 99%)
- Creates complete item-level view of stock between both backroom and sales floor
- Item visibility makes replenishment easier and more accurate
- Real-time view allows for replenishment alerts for when items/sizes are running low
- Item-level data from RFID allows for advanced, even AI-assisted planograms for individual stores
Supply Chain Traceability
We’ve discussed the difference item-level visibility makes for stores, but when it comes to supply chains the benefits are just as great. With RFID, inbound and outbound reads become far easier, and are done on an individual item level rather than SKU (stock keeping unit). This means each item is accounted for at each step of the supply chain, rather than just shipments or boxes.
This level of stock visibility also drastically reduces the rate of shipping errors or picking mistakes as they are detected by RFID readers and corrected by warehouse staff during exception handling or outbound reads.
Additionally, the location or status of items and shipments are visible in real-time, so stores and DC’s can easily track shipments and know exactly what they will be receiving. This makes any individual item fully traceable, as time and dates of when the item passed each read point in the supply process can be stored.
Benefits of RFID in the supply chain:
- Item-level visibility across entire supply chain
- Trace items against individual shipments
- Smoother operational processes
- Track shipments for delivery
- 100% inbound and outbound shipping accuracy
Increasing Process Efficiency
The difference in process efficiency from using RFID in retail is extensive, at every end of retail, be it the factory or the shop floor. An RFID reader, regardless of whether its fixed or a handheld, can read hundreds of individual items at once. Crucially though, as each item has a unique ID, they can never be read more than once. The signals also do not require line of sight to be read.
Naturally, this makes RFID inventory counts and inbound/outbound checks incredibly fast and reliable. In the case of store inventories, RFID has been found to reduce cycle count times by a staggering 96%. This therefore means they are far more convenient to perform and can be done multiple times in a week rather than a year.
Processes transformed by RFID:
- Cycle counts/inventories
- Fast & Efficient Inbound & Outbound reads
- RFID-enabled picking and packing
- Mobile guided replenishment from backroom to salesfloor
Providing Real-Time Data
Analytics and data is one area that e-commerce is ahead of physical retail. This is largely due to the fact that everything online can be measured, whereas retailers don’t really know what’s happening with their stores and customers in any specific detail, and the stats and data they do collect are often historical and at risk of being outdated.
However, with RFID this can all change. The simplest and most effective use of the data allows retailers to better leverage their greatest assets; their products and their stores. Quality data and analytics can allow retailers to ensure merchandise is in the right place to be sold. Information on which stores are performing better or worse is a basic retail KPI, but with specific item data, RFID produces far more detailed insights. This includes how well individual items are doing in specific stores, right down to specifics such as which sizes of items are selling better where. Insights such as these are naturally actionable, meaning retailers can take steps to move or reinforce stock at specific stores.
Data insights and results possible with RFID:
- KPI based performance tracking
- Detailed merchandise data & Analytics
- Operational excellence
- Actionable recommendations
- Compliance tracking
- Eliminates reliance on historical data
- Predictive capabilities for inventory counts and merchandise management
Transforming Customer Experience
There are many effects of RFID in retail that go beyond simple operational benefits to actively improve the customer experience. At the most basic level, this includes things already mentioned like increasing product availability, offering convenient omnichannel services and freeing up store associates to spend more time assisting customers.
However, because of the real-time inventory visibility it provides, RFID can go way beyond this in terms of improving the customer experience. For example, with reliable and up-to-the-minute stock information stores can utilise technologies like chatbots or smart fitting rooms to assist customers with their queries, supply information about other items or sizes available and even cross-sell to customers in the store.
What ways does RFID improve the customer experience?
- High product availability
- Store associates have more time for their customers
- Convenient omnichannel services
- A connected experience between online and offline
- AI-powered chatbots delivering assistance and product information via mobile.
- Smart fitting rooms providing a hugely improved fitting room experience.
- RFID-enabled Point of Sale – including self-checkout services
Just a moment, I have to check…
Making a great shopping experience can happen in seconds, but can also fail just as quickly. The customer who is ready to buy a desired article is often left standing in the aisle, being asked by the shop assistant to wait. He/she goes off to search for the article in the stockroom, perhaps call another location or check with the manager. If the article cannot be found, the sales interaction usually comes to an end with something like “Sorry, we don’t have it.”
The possibility that the desired item, say a skirt in size S, could be available in another store is something that the customer has to find out for themself. Of course they could try their luck online, and maybe even order it in the online shop if it’s still in stock.
That’s a shame. All that just happened because the shop assistant did not have the right information.
Lacking item visibility is a massive problem in the fashion industry, and almost all retailers suffer with lost profits because of it:
- If the article is not on the sales floor, it cannot be sold
- If no one knows that the article is in the stockroom, on display in the shop window or in the changing room, it cannot be sold
- If the sales person cannot give the customer information on the availability of an article immediately, a sale is missed and the customer is disappointed
- If the click & reserve inventory is not kept in sync with the store inventory, the reserved article cannot be sold
- If the article surprisingly “reappears” during inventory, for example someone finds it in an unopened box, it’s too late
- If there’s no item visibility in the individual channels, then flexible redistribution will not work
Getting the merchandise to where it is needed most
It’s the dream of every retailer: the merchandise offered is presented to precisely the customer who would like to buy it. With 5,000 articles in 700 stores in a variety of sizes, even the most experienced retailer can no longer make decisions by gut feeling.
- Sizes should not be evenly distributed among all stores
- Buffer stock should not clog up the stockroom
- Excess inventory that later has to be written off should simply not exist
Intelligent Merchandise Distribution
One is always wiser after the fact, for example at the end of the fiscal year or of a collection season, retailers know which items sold well in different stores and which did not. But then it’s too late. The merchandise ends up in the factory outlet store and eventually sold at discounted prices, the amount written off remains high, sales stagnate, etc.
However, retailers should immediately know which articles are sold well in which locations. Also, information on items that need to be reordered as well as the prevailing aging structure of articles at item-level per store is needed. To take the right decisions, it would be wise to have access to reliable real-time data in forms of dependable analysis and clear recommendations.
Actively manage your network of stores using real-time data:
- Real-time control over inventory and more efficient replenishment
- Quicker reordering
- Reduction in reserve stock
- Less merchandise in the channels, combined with greater inventory accuracy
- Smaller lot sizes, more precise control over the flow of merchandise
- Selling out collection merchandise at the planned margin, not via outlet sales
- Fast recommendations for activities to optimise the store
- Real-time dashboards promote the right decisions being made
- Rapid relocation of sale merchandise between the stores
Due to lack of an overall stock view, retailers and in particular, their sales personnel are not able to provide customers with reliable information e.g. on article availability. This results in disappointed customers who eventually buy somewhere else, which in turn leads to an enormous loss of revenues for retailers.
Get new insights on how a single stock view significantly changes the fashion retail industry and what positive effects come with it.