Ultimately, what does RFID do for retailers? What’s the big idea/big picture/ROI-generating function of RFID technology beyond inventory management?
The business of retail is sales. How well your inventory is managed has a direct impact
on sales success—and profits. Ideally, every piece of inventory will be sold at the established prices, with no discounting to correct over ordering or overstocks. Ideally, your inventory is right where it should be, rather than lost, missing or on backorder.
When a customer can’t find what they expect, or are looking for, they leave the store empty-handed. Out-of-Stocks account for 83 percent of the reasons customers leave without buying. More than a third of these customers (31%) find, and purchase, what they want
at another store, and you’ve lost that sale.
Keeping the right inventory in the right place at the right time, in the right size, color and quantity, as promised or advertised isn’t easy. Items get moved around, left in the fitting room or stolen by dishonest shoppers and staff. Shipments arrive short, inventory cycle counts are off by an average of 35 percent (or more) and pallets get shipped to the wrong store. (see last month’s blog post on distortion)
RFID facilitates a near “perfect” sales floor, without the costs and time demands of labor-intensive manual inventory counts. RFID for retail enables cycle counts that are quick and effortless. In fact, for inventory counting, RFID is 25 times faster than barcode technology and reduces the time required for physical counts by 90 percent. A few more capabilities of RFID relating to inventory and replenishment:
RFID can read 100s of tags per second
- Using a mobile reader, your staff can tour the entire store in minutes, and return misplaced items to their proper place
- RFID tags can be read through packaging, boxes, shopping bags and other containers with ease
- RFID reduces Out-of-Stocks by 30%, or more
- RFID monitors shelf (or table) level movement, so staff is able to replenish quickly, and efficiently.
Still, the question remains, what does this all mean for the retail store owner/operator? With RFID technology in place, your operation will always “see” where each item—each Profit Opportunity—is at any given moment as it moves
through the supply chain, and throughout the store. With the RFID tags constantly communicating product activity data, your sales floor and shelves become “smarter”; able to keep you in synch with what’s selling well (and what is not) in a specific store or region. The granular intelligence provided by the RFID tags significantly improves reordering and forecasting accuracy, with more specificity for what your customers want and need.
By tracking each Profit Opportunity (retail products and goods) more precisely, more efficiently and more cost-effectively; ensuring that what the customer wants and expects is on the shelf, RFID helps you sell more merchandise with less margin of loss while keeping customers satisfied and loyal.
Simply stated, RFID helps retailers do retail much better. And that’s it. That’s the big idea/big picture/ROI-generating role of RFID for Retail: Saving the Sale.