Adopting RFID: A view from the experts
Date: October 02, 2017
Category: Industry news
RFID technology has been talked about by retailers for many years. It may not have set the world alight ten years ago when the first wave of hype hit, but now many major players, including John Lewis, Tesco, M&S and Macy’s, and more recently River Island and Oasis, have all started to adopt RFID.
This new wave of adoption is why RFID has seen considerable growth and is forecast to grow further. And as a transformational technology, many more retailers are now thinking about it, but are yet to take the plunge. We’ve spoken to some of the leading RFID solution providers out there – the people that use the technology every day – to get an expert perspective.
Why should retailers adopt RFID?
There are many use cases for RFID in retail, and landing on one to prove your business case can seem overwhelming. Increasing sales is of course a popular one, but there are many other benefits to explore.
RFID technology can count stock at speeds far superior to other forms of scanning, like barcoding. This enables retailers to conduct more regular stocktakes and improve stock accuracy.
Kam Pancholi, from SML explains, “Once retailers have achieved improved stock inventory accuracy, all the other benefits begin to gain momentum. With accurate stock views retailers can provide better customer experience, improved in-store replenishment and improved omni-picks from the store as opposed to deliveries from the warehouse all the time. RFID cuts the logistics process and retailers can sell more products at a full price and reduce markdowns.”
Phil George from Nedap gives his view, “It’s a combination of different things that all lead towards increasing sales. The simple way to describe it is: The better a retailer’s understanding of stock files and stock accuracy, the better the replenishment and availability. This will lead to better sales and margin. RFID also helps retailers meet the challenges of serving a more demanding customer.”
And retailers are facing a lot of challenges now, especially where demanding customers are concerned, as Goetz Pfefferling from Impinj makes clear. “Customers’ tolerance for items being out of stock has gone down. They now expect all items to be available anytime and anywhere. Customers are shopping across different channels which puts pressure on retailers and brands to deliver a better customer experience. For all this to work, data is key. Retailers need to know what items have been moved in store, which ones are out of stock and which ones are missing. Having this data will provide visibility for the future.”
How can retailers ensure a good return on investment from an RFID implementation?
Many retailers are eager to understand what RFID can do to improve their operating efficiency and to drive additional revenue opportunities. RFID is usually implemented to track the movement of goods, whether that’s in-store or from the warehouse. But to ensure a good return on investment (ROI), retailers must understand what they’re really trying to achieve beforehand.
Phil George from Nedap explains this further. “Make sure you have a clear purpose for your trial to ensure you can measure the effectiveness of your implementation. There are so many cases and benefits to adopting RFID, but we are finding that some companies don’t always have clear objectives for the trial by which they measure its success or not.”
Use the RFID resources that are freely available
Because RFID has been around for many years, there’s a lot of available sources on RFID. Take a look at the GS1 UK apparel RFID toolkit for example.
It’s important for retailers to understand this technology and how it can increase their sales and be used towards customer satisfaction. Geert Denhartog from Checkpoint recommends “talking to as many people as possible who have deployed it and learn from their mistakes to ensure a successful ROI.”
It’s not as expensive as you think
A common mistake is to think that RFID is simply too expensive. Kam Pancholi from SML says, “There is a misconception that RFID is a big investment and that achieving an ROI depends on high price points of retailers’ products. We work with Tesco in over 500 of their apparel stores. They are not a premium retailer, but they’ve seen big benefits. by reducing their stock holding. RFID has made a real difference to their business. Most customers have achieved an ROI in less than 12 months – and some in just 6 to 7 months!”
Goetz Pfefferling from Impinj also points out that “in our experience, RFID has a very positive ROI model. The benefits in both increasing sales and reducing inventory make it a killer application.”
How can you ensure accuracy of counts with RFID?
One of the main objectives behind RFID is to improve stock accuracy, so how does this work?
Kam Pancholi from SML explains, “There are two elements to ensure accurate counts. The first is to have a scalable, interactive and easy-to-use software application. A comprehensive application will notify the person conducting the stock count when they’ve counted all the items as compared to their last count – plus the items received, minus the items sold. The second element is using the best RFID readers that are available. This will enable fast and accurate reading of tags.”
Phil George at Nedap gives his view, “Accuracy of counts is also dependent on the quality of the label, including the antenna and the quality of the chip. In choosing your label, consider whether it’s fit for purpose by taking into account what it’s being attached to and the environment you’re operating in.”
What’s your number one tip for an apparel retailer considering RFID?
One of the biggest tips would be to keep it simple and implement it in one area first to help measure performance. Phil George at Nedap says, “Have 3 KPIs max, and make sure you know what you’re trying to achieve before you start.”
Kam Pancholi from SML suggests that retailers who have their own brands should look at RFID first. “Focus on the ROI, not gadgets and gizmos. If you are a vertical retailer, where you control your brand closely, it is a simpler business case analysis. Big department stores have a more complicated scenario because they must get vendors and brand owners on board. This takes time and adds complexity. Having own brands, with the added benefit of having their own supply chain, will allow retailers to have a good starting point and focus on the areas where they think their stock problem is.”
Having a higher level of stock accuracy is usually a stepping stone for retailers. Improving data quality on items in store will create a stronger corporate strategy which will help the business run better. Goetz Pfefferling from Impinj recommends, “Start with stock accuracy in the store first and then work towards the logistics operations.”
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