21 August 2013 — Retailers have implemented Radio Frequency Identification (RFID) technology to optimize a number of store inventory processes. In addition to creating efficiencies, the technology also can help reduce theft by tracking a product’s entire path throughout the store.
Yet as omnichannel retailing continues to evolve, more retailers are focusing on the ways RFID can help to create a more seamless shopping experience across all channels and enable more flexible fulfillment models, such as buy online, pickup in-store.
In the following Q&A, Randy Dunn, Director of Global Sales and Professional Services at Tyco Retail Solutions, discusses current trends and advancements in RFID. Additionally, Dunn shares insights around the role of RFID in omnichannel strategies for leading retailers such as Macy’s.
Retail TouchPoints (RTP): What is the current state of RFID? Are more retailers interested in testing and implementing the technology?
Dunn: Item-level RFID has never had this much interest in the retail industry. Retailers are beginning to connect the dots that omnichannel shopping is driving a need for more accurate inventory information across the entire enterprise. RFID, with its ability to count items 50 times faster than the bar code, allows retailers to sustain accurate in-store inventory positions in their systems of record through regular cycle counting and system of record updates.
RTP: Why do you think there was such a surge in interest?
Dunn: As retailers build their omnichannel capabilities, it’s clear that leveraging in-store inventory is a must in order to maximize their revenue opportunity. Accurate inventory information that helps optimize order fill rates at the store level is an essential capability for the more advanced omnichannel offerings like buy online, pick-up in store.
RTP: What benefits do retailers using RFID typically see following implementation?
Dunn: The primary use cases for RFID are associated with the benefits of having more accurate inventory information. Shelf restocking, distribution center-to-store replenishment, and omnichannel order fulfillment are the obvious opportunities. As stores become more saturated with RFID tagged inventory, second-order use cases like loss prevention and work force execution become viable. Supply chain execution and customer experience innovation are also ripe areas of opportunity for creating value. In addition, a considerable amount of work has gone into making RFID handheld devices more intelligent, which helps minimize the per store cost associated with deploying RFID.
RTP: Can you share any RFID success stories?
Dunn: The clear market leader with respect to item-level RFID is Macy’s. They have been pretty open and consistent with their message that RFID is essential to their future retailing model. In fact, Karen Hoguet, CFO of Macy’s, regularly cites RFID in her quarterly earnings calls when asked about enabling technologies that support Macy’s core strategies.
RTP: Do retailers face any specific challenges when implementing RFID?
Dunn: Weaving RFID into the fabric of how stores operate is a much bigger challenge than it appears to be on the surface. Changing core business processes and educating store employees on the technology is a significant change management issue.
RTP: How do you think RFID will continue to accelerate through the rest of 2013 and into 2014?
Dunn: RFID has been a mainstream topic in retail for over 10 years. It also has been pronounced dead at several points over that same period of time. The fact is, there has been no substitute technology to offer the benefits associated with RFID over the past decade. Furthermore, digital retailing is placing new pressures on retailers’ quality of inventory information, which means that RFID should be a very important retail technology for the future.