RFID in retail continues to become more popular as more and more retailers begin to learn about RFID and adopt this technology. Although item-level RFID can have an impact on several areas of the supply chain, the real benefit is on the store floor. Traditionally, the store floor has been a blind spot for retailers. Some benefits of item-level RFID on the floor include reduced out of stocks and several new potential marketing/upselling opportunities. If a retailer decides to move forward with item-level RFID, what is the potential for the store floor? How can they use item-level RFID in the most effective way?
Retailers thrive when they not only attract new customers to their stores, but also are able to continually sell to their existing customer base as well. This type of instilled customer behavior is essentially brand loyalty. For retailers to truly achieve brand loyalty, customers must feel understood and comfortable with a retailer, and its brand(s).
The most effective way retailers can achieve this culture of selling is to provide a personal and convenient shopping environment for clients. Customer loyalty programs are a tangible way to help retailers achieve brand loyalty. When coupled with RFID-enabled loyalty cards, the system can autonomously alert sales staff that a customer has entered the store and provide pertinent information to the associate. This information can range from the client’s name to a quick glance at their client’s past shopping history, all enabling the associate to provide a more personal experience for the client.
The retailer can even go one step further and establish a clienteling system based on this card that will allow associates to better serve the actual customers in the store by having past purchases available and products the customer may be interested in that are currently in the store. This will help the retailer personalize the experience for the customer allowing them to offer a better in store experience and execute better at the store level.
On the management side, retailers know what they buy and know what they sell. But on a real-time basis, it is difficult to know what is actually on the store floor. Items have been moved around, misplaced, put back on the wrong shelf, and sometimes stolen. Without performing a time-consuming manual inventory audit, retailers don’t have accurate real-time information. However, by using item-level RFID, retailers can do that audit in 5 percent to 10 percent of the time.
Audits, once completed, can be evaluated at corporate headquarters. Auditors can then communicate with the stores and assist them in ensuring the highest inventory accuracy is achieved. By performing more regular inventory audits, retailers gain “visibility” into the store floor at the corporate level. Markdowns and out-of-stocks are reduced, which in turn improves the bottom line and increases sales. Retailers can also measure how long inventory remains on the store floor, in order to make decisions about product issues.
In order to provide a more convenient shopping experience with RFID, stores can implement smart fitting rooms. These systems incorporate LCD touchscreens and RFID readers to display the clothing items customers bring into the fitting room. From here clients will be shown other items that match with the items they brought in and similar items. This, coupled with the ability to request other items to be brought in to the fitting room, provides lots of opportunity to cross-sell and upsell in a non-invasive manner.
These fitting rooms gather data on every item that enters, and when connected with POS data can provide management with powerful analytics on conversion ratios, item popularity, item sale cycle and more. Finally, the fitting room solution helps loss prevention efforts. This is accomplished through business rules that can be set on suspicious activity in the fitting rooms, as well as constant monitoring of the items in the fitting room. This all helps to ameliorate one of the biggest blind spots in retail stores — the fitting room.
Store-level RFID also gives management the ability to trace inventory movement around the store. It allows you to pinpoint the exact location of an item whether it is in the fitting room, back room, or even down to an exact rack in the store. This is a great feature for ensuring that the customer leaves with the product they came into the store to buy. How often does the inventory system say there is an item in stock and the associate cannot find the product in the store or sometimes in the back room? With item-level RFID, the handheld reader can guide the associate directly to the item in question by looking for that specific tag. Helping to ensure that a customer leaves with the item they want will help build brand loyalty and the customer will be more likely to return.
Finally, having store-level RFID will allow customers to process payments faster. With their RFID-enabled loyalty cards, retailers will be able to eliminate long waits at the cash register as people will be able to check themselves out without having an employee scan each item with a barcode.
We have now looked at what RFID can do for a retail store from both a customer/marketing side and from the management/operations side. There is no doubt that retailers will benefit tremendously, but so will their customers. By giving “visibility” to the store floor, retailers can increase sales by increasing availability of items that the customer wants and eliminate what the customer is not interested in. By identifying customers when they enter the store and in the fitting room, retailers can enhance customer service and build even further brand loyalty. The fitting room, when equipped with RFID, will give the retailer a tremendous opportunity to upsell while at the same help to eliminate shrink, by knowing what is going in and out of the dressing room. But most importantly, RFID can help the retailer to better execute on a customer-to-customer basis. There is no doubt that RFID should be near the top of every retailers list when it comes to technologies that will have a positive impact on the entire organization.
Dan Sandler is vice president of Overheer Systems, a provider of item-level RFID solutions for apparel and footwear retailers. Overheer’s application, Overheer Reflect, allows retailers to gain better visibility into their inventory on the store floor, which in turn allows retailers to increase sales and better manage their inventory.
Peter McCoy is the head of business development at Alluring Logic, a customer engagement platform provider. Through the use of RFID and other technologies, Alluring Logic creates enterprise-wide systems that help retailers and their employees better understand and engage their clientele.