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Could RFID technology revolutionise the shop floor?

Posted: 1 June 2018

Radio frequency identification (RFID) technology has been around the industry for many years, and used in other sectors, such as the car industry, for decades. Within retail RFID has been heralded as a game-changer to the shop floor, and yet, it doesn’t feel that this has actually happened. Why not? Does RFID have a role to play in-store?

Over 10 years ago Walmart made an announcement that was to change the face of retail. All of their suppliers were to provide goods to Walmart with an RFID chip which would enable Walmart to keep an accurate track of stock. However, in reality this change didn’t happen as it was too expensive for suppliers to comply, and as a result, progress in the use of RFIDs was stilted.

But as it turns out, not abandoned.

The ubiquitous barcode

With less fanfare, Walmart has quietly but consistently pursued the use of RFID technology within their stores. The corporation has an image as a leader in the adoption of new technology – in 1983, for example, Walmart was the first to use universal product codes, also known as barcodes, which are now found on pretty much every item we buy today. And barcodes have been wildly successful, in some ways to the detriment of RFIDs. Barcodes can simply be printed and attached to the product, it is easy and low cost, and this is a big reason for its continuing popularity.

So why the sustained effort to use RFIDs? RFID tags can communicate with the network, you can automatically alter prices, stock levels are wholly accurate – these things barcodes just cannot do. And it isn’t just Walmart, it is reported that top retailers are working on the integration of RFID technology within their stores. In a world of increasing online shopping sales, perhaps RFID could improve the outlook for bricks and mortar stores?

To date, most RFID within retail has been used for inventory purposes. By attaching tags to products, manufacturers can track their goods from creation to shipping and in to the store. In fact, Walmart realised that this was the angle they needed to take to get suppliers on board. Yes, RFID tags are more expensive, but, by working collaboratively with manufacturers to get them to understand the benefits the tags can bring to themselves as well as the retailer has encouraged their use.

RFID hard tags for security and inventory

And this use within inventory actually creates a key benefit for the shop floor. The advantage of a bricks and mortar store over internet shopping is that shoppers can actually get their product immediately. Where this fails is when products are out of stock in-store, and in the past this has been a major frustration for shoppers. Accenture reported in 2016 that the biggest area consumers identify as needing improvement is the shop floor, with an increasing frustration of out of stocks, and a desire to check stock is available before leaving the house, and also the ability to order out of stock products.

With the use of RFID out of stocks ceases to be such a problem. RFID enables accurate stock checks at the touch of a button. Active management of stock levels ensures that there should never be too few, or conversely, too many, of each product held within the store.

RFID technology is also starting to edge its way out of the warehouse, with retailers beginning to recognise the sheer power of the technology.

Get the stock out of the warehouse and into the shop.

For example, lululemon frequently found they had merchandise that was sitting in their warehouse rather than on the shop floor. By utilising RFID technology the company reports a 98% inventory accuracy and the shop floor can maintain appropriate stock levels, in addition shop floor staff have handheld devices which enables them to check available stock whilst with customers.

A pet hate of all shoppers – lengthy checkout queues - is being tackled through the use of RFID technology. The recent opening of the first Amazon Go store in the US utilised RFID technology in combination with other technologies to eradicate the checkout. The technology tracks which products people leave the store with and automatically charges their account, sending a digital receipt.

RFID technology is being used for Digital price tags that enable the retailer to change prices on the shop floor in real-time. Digital price tags allow retailers to react to shopping trends throughout the day, increasing and reducing pricing automatically to maximise sales.

Interactive fitting rooms are starting to pop up in high end stores such as Burberry and US retailer Neiman Marcus. The fitting rooms use RFID tags to recognise the products being tried on and syncs with inventory information to display onscreen to the shopper other size and colour options. Customers can simply request additional products or accessories to the fitting room through the computerised mirror. It will also record how you look in 360-degree views so you can send to friends for their opinion on how you look.

In addition, customers need to input their contact details to use the mirrors within these fitting rooms. As a result, companies are harvesting valuable customer data, not just contact details but their purchasing behaviour. Did they leave with a purchase? What did they try on but not buy? Retailers can utilise this information and analyse trends in the way that online retailers can knowing what has been added to an online basket but not checked out.

Store layouts could be improved

RFID technology is also being used to help retailers improve their store layout. For example, RFID tags can help retailers track which items are often being purchased together enabling retailers to co-display items to encourage additional purchasing.

RFID technology may not be widely used yet across all stores, but the benefits the technology can bring are starting to be recognised by retailers. In an ever-competitive market place, RFID is helping stores increase their sales and ward off some of the threat from internet shopping.

Read on for more ideas for how to gain the attention of shoppers in-store

KeyTakeaway POS

Key takeaway
There is a recognised pattern that new technology very often goes through a period of excitement and hype upon launch which typically leads to disappointment. The technology then slowly builds back up, often unnoticed, and makes quiet but serious progress until it becomes ubiquitous. RFIDs are certainly following this pattern. The question has now changed from can they be useful, to when and how can we deploy them? RFIDs are here to stay.

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