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The time has come for RFID to shine

We were delighted to host the ECR Community Shrink & OSA Group at our UK headquarters last week, with representatives from 15 major retailers coming together to discuss the potential of RFID in an exclusive workshop. It was an enlightening day, learning about how stores are approaching trials of the technology and hearing how business cases have been developed.

09-07-2018

Stepping back in time

Although the technology is now widely regarded as being the best way for retailers to improve inventory management and optimise stock holdings, RFID has had ups and downs since its inception in the late 1990s. Privacy concerns, cost and low-quality tags scuppered any chance that it would take off. As Professor Adrian Beck, who ran the workshop, explained: “It was a technology before its time. It came too early.”

Today we are in a position where some of the world’s leading retailers trust the technology and are utilising it to great effect. Some are using fairly simple systems with soft tags and handheld readers, while others are experimenting with overhead readers and integrated DC solutions. And its all down to the fact that vendors, like Checkpoint, have adopted standardised frequencies for RFID and begun developing solutions that are completely scalable and easy to deploy. The proof of concept is evident, it’s now a matter of securing the investment and making sure it can work across an estate.

Building a business case and starting the journey

During the workshop, Professor Beck focused on the findings of the group’s latest research into RFID, which highlights the lessons learned by 10 major retailers, including John Lewis, Adidas, C&A, River Island and Tesco.

He explained that many retailers have the same objectives when it comes to rolling out an RFID programme:

1. Driving sales through improved merchandise visibility
2. Delivering a better customer experience
3. Reducing the amount of stock being held
4. Introducing new business efficiencies
5. A means to deliver an omni-channel offering

Interestingly, Professor Beck revealed that all ten of the retailers were applying soft tags at source and using handheld readers to capture data from merchandise. None had started their RFID journey early in the supply chain, it was in-store where the ROI was easiest to demonstrate. However, it was noted than many were now looking at moving the technology back through the chain to deliver further efficiencies.

Our key points

After analysing the research and debating the internal obstacles of RFID, the group created five key points that retailers should consider when starting an RFID journey:

1. Choose a business leader – a person within the business that has responsibility for on-shelf availability or stock integrity
2. Engage with the store associates – ensuring they are educated on the value of RFID and how it can support the business
3. Select trial stores (up to three) which will enable you to prove the concept works for your business
4. Seek external help – speak to consultants, technology suppliers and other retailers to ensure you’re approaching a trial the right way
5. Choose your technology – tags are no longer an issue, they are reliable, but you need to look for suppliers that have scalable technologies and can work with you on your journey

Our key observations

Having listened to the thoughts of the 35 delegates that took part in the workshop, we came away from the session with four key observations:

1. Most of the time there is a bottom up approach to securing investment in RFID, with operational teams trying to convince the c-suite. However, many of the budget holders were in operational roles when RFID failed to live up to expectations in the 90s and noughties, and some still have concerns about the technology. But as major retailers start reaping the rewards there will inevitably become a top-down push to deploy RFID into the business and teams need to be prepared for this.
2. RFID doesn’t need to be complex. A trial should be simple to implement, with selected stores able to scan tags with handheld readers. This is sufficient to prove the ROI and retailers will see inventory accuracy increase from 65-75% to 93-99% and ‘not on sale, but in stock’ merchandise fall from 15-20% to around 2%.
3. Despite all its positives, RFID can’t fix bad processes or poor compliance. This is why it’s critical to get staff engaged with the programme. Colleagues need to understand that when stock is transferred between stores it needs to be scanned in and out, that level of understanding is the bear minimum to ensure you benefit from the technology.
4. The technology enables retailers to precisely monitor what is happening in a store. It is the enabler that will demonstrate how successful sales promotions and marketing campaigns really are. It also enables store staff to spend more time on the floor, helping customers and deterring thieves.

To download the full ECR report, please click HERE