Radio Frequency Identification technology (RFID) has been around for decades, but recently many retailers are making it their number one priority when it comes to inventory management. With concerns about inventory tracking and shrinkage prevention on the rise, retailers are using RFID systems to improve visibility over the location of items, when it was sold, at what price, and more. A recent survey even found that 61% of retailers plan to start using RFID by 2026. But what are the benefits and how have retailers already taken advantage of the technology?
What can RFID do for inventory management?
Unlike traditional barcode systems that require manual scanning, RFID tags can be read automatically, allowing for real-time updates on stock levels. Retailers can track their inventory throughout the supply chain, from warehouse to store shelves, and stay informed about the entire journey of their products. This means retailers can more accurately pinpoint an item’s location and find out whether it left the warehouse, the store, or crossed state lines, allowing them to streamline restocking and organization.
RFID stores data on a small tag that contains information about the product, such as SKU numbers, inventory levels, product names and descriptions, prices (including ongoing discounts or promotions), the item’s origin, and more. This makes it easier for businesses to collect data about their products across all channels and catch any discrepancies. For example, let’s say one of your stores recently scanned eight units of an item, but two were shelved in the wrong location. With RFID, you can easily see where those items ended up in your store, helping you avoid lost inventory.
Benefits of using RFID software
Bill Hardgrave, President of the University of Memphis, recently touched on the importance of RFID in a retailer’s competitive strategy. “There’s been a misperception that RFID perhaps is most relevant for soft goods like apparel and towels, linens, things of that nature,” he said. “We’re getting to a point where, if you sell it, we can tag it. Things with liquids and metals, fragrances, lipsticks — you can tag a frying pan.”
RFID has come a long way since its first introduction, empowering retailers to have more control over their inventory processes. Here are just a few of the benefits retailers have been experiencing.
Track stock accurately
Many retailers, like global fashion and footwear brand adidas, have introduced RFID to help count stock and track inventory movements inside and outside their stores. RFID provides full visibility over whether an item is in the warehouse, shop floor, fitting room, or if it has left the building. “RFID for us is a key enabler for driving efficiencies in the stores,” Andreas Bierlmeier, Senior Director Tech Management at adidas told us. “Maybe in the inbound, in the outbound, but as well making sure that we’re transferring the articles from the back of the store to the shop floor.”
Having RFID technology connected to their business management system, LS Central, enables adidas to track exactly where their items are. For example, if an employee makes a stockroom request for basketball shorts, they can see which item was taken to the customer and stay informed about its whereabouts – if it went to the fitting room and got left there, or if it was purchased. This provides adidas with better visibility over their products within each of their stores, ensuring they can keep accurate stock count and avoid hiccups that could affect their sales.
Reduce manual labor
With RFID, retailers can significantly reduce the amount of manual stock-taking required in-store and optimize their store associate’s time. The technology can scan thousands of items in a span of just a few minutes, speeding up stock management and weeding out discrepancies. American clothing brand Levi’s has collected a wealth of data since introducing RFID into their business and noted the significant cut in operational costs it provided. “We have seen an 80 percent reduction in labor hours,” said Kirsten L'Orange, Vice President of Global Direct-to-Consumer Omnichannel Productivity at Levi’s, “And then you can reallocate that labor to sales-related tasks.” Now, employees at Levi’s can limit the amount of time they spend on inventory, and other back-office tasks, to focus on customer service.
Prevent inventory loss
Recent data shows that more than 60% of shrinkage is due to reasons within a retailer’s own operations. American department store chain Macy’s, for example, realized that customers could have been taking their merchandise to another level in the store, and leaving through a less secure exit than their main one. This led them to expand their RFID capabilities to cover all their entrances, which they call “smart exits,” in addition to tagging their items and layering RFID with smart shelf technology. “We had people working for us for many years who were stealing from us,” said Joe Coll, Vice President of Asset Protection Operations and Strategy at Macy’s. “When you start to combine technologies, you’re getting video time stamps of every individual that took a product off a shelf without paying for it.” With the help of RFID, Macy’s has boosted security in their stores and kept merchandise under optimal surveillance.
RFID technology can be a powerful tool to help you avoid inventory challenges that can affect your bottom line, helping your business stay efficient and profitable. Thinking about introducing RFID into your strategy? Make sure you have a robust business management system in place to support your efforts.
Contact us to learn why brands like adidas choose LS Central to manage all their operations, including RFID.
