Retailers are constantly looking for better ways to manage inventory and reduce shrink.
With RFID technology, a better solution may finally exist. While some retailers have tested RFID in the past, the technology just wasn’t ready yet to fully track inventory from warehouses to stores and from store shelves to customers’ carts.
Now, a push is being made to finally implement RFID technology in new ways to help transform the retail sector.
Even Forbes believed Wal-Mart could solve major inventory issues, such as keeping inventory numbers current and reducing shrink. However, the timing just wasn’t right.
This led many in the retail sector to see RFID technology in a negative light. Now, the technology has advanced and many retailers are starting to see exactly what Wal-Mart saw 15 years ago.
Solving Common Retail Issues
Placing RFID stickers on every item might sound anything but efficient and cost-effective, but once implemented, you might be surprised at how effective it truly is. Some of the top retail issues RFID is solving includes:
- Inventory tracking
- Reduce shrink
- Reduce employee hours scanning new inventory
- Track lost items
- Better understand customers
Shrink issues alone cost retail businesses over $48 billion in 2016. In 2017, the costs of dealing with shrink problems are increasing too, making the need for better solutions even more important. The average cost per shoplifting incident in 2017 was over $700. This makes the cost of implementing RFID technology seem minimal.
Outside of shrink, inventory management is the next big issue. As with Wal-Mart, many retailers struggle with keeping an accurate inventory. Items may not get scanned in/out. Others may get placed incorrectly. As a result, inventory isn’t correct and this could result in customers not finding what they need or the business losing products simply because they can’t find them.
Due to RFID being easier to scan and track, the majority of inventory issues retailers face, including shrink, could be reduced drastically. However, it will take time for retailers to fully embrace this new method.
RFID Technology In Action
As RFID technology has changed, so has the ways businesses are implementing it. Macy’s is currently one of the biggest retailers implementing RFID on a major scale.
While Macy’s isn’t releasing any numbers just yet, the company has stated they’ve experienced improvements in inventory tracking and a reduction in incorrect out-of-stocks. On average, inventory accuracy is expected to increase by anywhere from 63% to 95%. Currently, Macy’s plans to tag all items with RFID stickers by the end of 2018. Only after a year does the company plan to release full details of the experiment.
In a study of European and US retailers with profits of at least $500 million, shrinkage was reduced by at least 5% when RFID technology was used.
However, RFID technology alone isn’t going to solve the shrink problem. For instance, Amazon’s physical Amazon Go store doesn’t have a single cashier. Instead, shoppers stroll in, gather their items and walk out. Their Amazon account is automatically charged based on items they have with them as they leave.
While Amazon says the company doesn’t use RFID, they do implement other technologies that work well alongside RFID. For instance, they use security cameras, motion sensors and AI technology.
By combining RFID technology with other security measures, the retail sector not only reduces shrinkage, but improves the overall customer experience. With less shrink, prices stay more competitive. With better inventory management, customers don’t encounter empty shelves or out-of-stock messages because employees couldn’t find the products that were sitting in storage or back rooms.
Contact BOS Security
Are you looking for better ways to protect your inventory? Contact us today at 404-793-6965 to learn more about how our services help protect your inventory and customers.
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Image: Marcin Kempa