RFID technology has shaped retail operations across all sectors for decades. The technology is so influential that the global RFID market size is projected to reach an incredible $17.4 billion by 2026. But how exactly do these retail businesses implement RFID, and how are their deployment strategies and outcomes evolving now, and in the future?
A key report from ECR Retail Loss Group – Measuring the Impact of RFID in Retailing: Key Lessons from 10 Case-study Companies – focused on understanding the core business case for RFID. It identified a consistent strategy for retailers across the board: counting stock in retail stores with a handheld reader to achieve improved inventory accuracy. The primary justification for RFID remained its ability to help increase sales, reduce staff costs and stock holding, and bring down the value of retail losses. Beyond this, innovation was largely found to be incremental and bound by the need for a robust business case.
However, brand-new research that builds upon this 2018 report has revealed insights into how retailers are evolving their RFID systems, looking in particular at the way they innovate. Supported by Checkpoint Systems, Utilising RFID in Retailing: Insights on Innovation is authored by Emeritus Professor Adrian Beck from the University of Leicester and the ECR Retail Loss Group. Providing an up-to-date take on the topic, it clearly demonstrates the value that RFID brings to retail businesses and the effect it has on their bottom line.
Integrating RFID into ‘Business as Usual’
As businesses are becoming more established in their use of RFID-generated data, they are gradually incorporating more use cases into their business-as-usual practices. For example, the capacity to collect inventory data with RFID means that companies are now using it to replace routinised, but infrequent, stock takes which helps to streamline the audit process. The report also found that using RFID improved store processes, from reducing phantom out-of-stocks to improving rapid stock search and find tasks, considerably helping to deliver an efficient ship from store (SFS) capability.
Delivering an omnichannel future
For many retailers, omnichannel is now regarded as business-as-usual and as such, the omnichannel benefits of RFID are really driving the uptake within retail organisations. By all of those questioned in the report, RFID was seen as a key facilitator in delivering omnichannel retailing which shows it now goes beyond the more traditional retail model.
Without the inventory accuracy offered by RFID, few retailers believed they could reliably use their stores as fulfilment centres to output online orders. Further to this, using RFID to improve online order accuracy is also becoming imperative to retail strategies. Successful deployment can reduce errors that occur when orders are picked and packed manually, which reduces complaints and returns and significantly improves customer satisfaction. And the evidence is clear; one retailer that took part in the study even reported a 90% reduction in incorrect orders and customer complaints since introducing RFID into the process.
RFID and the self-checkout
Self-checkouts (SCO) is another area of retail operations that is being impacted by RFID, although the benefits are yet to be fully tested or realised. At present, its reach is limited as successful use requires 100% of SKUs to be tagged and for read reliability to be very high. However, in situations where this is possible, RFID technology can offer a multitude of benefits. For example, increased speed of checkout as RFID does not require line of sight-reading for production identification, and improved customer service as the technology reduces the likelihood of double scanning.
Facilitating retail loss prevention
Elsewhere, RFID is also facilitating loss prevention. While none of those interviewed argued that reducing loss was the primary reason for investing in RFID, many were now reaping more indirect benefits in this area. By identifying products uniquely, RFID can be used to tackle refund frauds and also identify stolen products. Lack of information about missing items is also a major problem for loss prevention teams, but RFID data can provide insight into which products are vulnerable to loss and, because of more frequent inventory checking, enable the performance of interventions to be quickly and accurately assessed.
This new research tells a strong story about the evolution of RFID and its potential benefits. It seems clear that for many adopters, the use of RFID is an incremental journey – as viable business cases emerge, so its use further develops. And as the retail customer demands more, it is apparent that RFID data is becoming increasingly viewed as an indispensable tool for many retail users operating in an omnichannel world.