How to extract 95% more value from retail investment in RFID

From rocky road to retail gold: Top retailers share their secrets for success as RFID (Radio Frequency IDentification) finally comes of age

●     How RFID can reduce the annual stocktaking budget and save millions in audit costs

●     How RFID can cut customer complaints by 90%

●     How RFID can deliver record increases in customer Net Promoter Scores

As retailers and brand owners such as Inditex, Decathlon and Adidas continue to invest in RFID technology, a new report from the ECR Retail Loss Group (Utilising RFID in Retailing: Insights on Innovation) finds it’s no longer just for stock-taking. Now RFID is used at the checkout, and in the supply chain, to support store operations and logistic process efficiency. 

Based on responses from 25 leading global retailers, the report identifies four stages of RFID maturity for businesses: from Basic to Leading Edge. It also demonstrates the opportunities ahead to use the technology to reduce waste.

 “There was a lot of hype in the early days. RFID required a lot of cost, energy and effort. Now, tagging technology is much more reliable and cloud computing means retailers have capacity to manage high volumes of data,” says the ECR Retail Loss Group Academic Advisor, and the report’s author, Prof Adrian Beck.

The pandemic put a rocket under online shopping and, compared to pre-pandemic levels, it’s still on an upward trajectory as a proportion of sales. E-commerce will soon account for one-third of all apparel sales.

“Online consumers have little loyalty. Retailers need to deliver there and then, which means tracking and counting inventory better than ever before. RFID does it automatically and instantly. You don’t always have to rely on humans and a clear line of sight of the taggant/barcode.”

The report was commissioned by ECR Retail Loss based on its members’ needs. The ECR Retail Loss Group makes all its research free and available to the entire industry and identifies new tools, techniques and approaches to help retailers sell more and lose less.

It found that, despite many recent innovations, there remains huge untapped potential for the uses of RFID in retail.

 “We probably use 5% of RFID’s capability…there’s lots of talk, plans and aspirations in the industry for what RFID can do but not a lot of evidence thus far.”

Managing stock levels

RFID frequently plays a key role in the audit process. When it was first introduced for stock counting, most (if not all) retailers chose not to rely on the RFID data for their annual counts and audits. The research found that is changing.

Now tracking goods via RFID can be both quicker, cheaper, and more frequent. Some retailers report that they have even abandoned the annual stocktake in favour of real-time RFID-based stock counts.

 “We’ve achieved a significant saving on stocktaking; increasingly making annual stock takes redundant.”

“Year-on-year we’re saving a seven-figure number. It was never part of the original business case for RFID, so it’s a good development for us.”

Shipping and customer service

Manually collated online orders can lead to errors in the picking and packing process which in turn lead to increased returns and customer complaints.

One retailer interviewed for the report claims that using RFID to cross-check fulfilment led to a 90% reduction in incorrect orders and customer complaints.

“All e-comm orders use RFID – there is a check on outbound to make sure the product pick matches the customer order. This has led to a massive reduction in claims for incorrect orders and complaints – the number has dropped by at least 90%.”

“Customers are more tolerant of inconvenience and out-of-stocks when visiting a physical store than when shopping online.”

Smart fitting rooms

One interviewee reported an increase in customer satisfaction as a result of investing in RFID technology. Their smart fitting rooms scored the highest net promoter score (NPS) of any of their current customer-facing digital tools. 

“The cost of RFID has come down, making it more cost-effective to use on a broader range of products and the business case does not have to be as robust as in the past.”

John Fonteijn, Chair of the ECR Retail Loss Group, says: “We’ve been reviewing the use of RFID since the early 2000s. It has a long history in retail. At times it’s been a rocky journey. But now, retailers investing in RFID are growing and developing how they use the technology.

 “Our study brings together the ways retailers are innovating. And enabling RFID to add value to their businesses and in the right circumstances, this technology can deliver concrete benefits by improving inventory accuracy and providing valuable data.”

25 companies from Australia, Europe, and the USA took part in the ECR Retail Loss Group survey for the report. Thirteen retailers then supported further, in-depth interviews.

Businesses taking part include Adidas; C&A; Decathlon; Harvey Nicholls; Kurt Gieger; Lululemon; Marks & Spencer; River Island; Stadium; and Brunello Cucinelli.

All those interviewed recognised the potential for investing in omnichannel shopping, for which RFID is considered a key facilitator.

“We need to futureproof the business and therefore we need a proper omnichannel strategy.”

Read the full report here:

https://www.ecrloss.com/research/utilising-rfid-in-retailing-insights-on-innovation