Using RFID in-store to improve profitability

Retailers who use RFID technology in-store in innovative new ways have been enjoying a boost to their bottom line, a new report has revealed.

The research report, Utilising RFID in Retailing: Insights on Innovation, highlights how companies are employing the technology for a broader range of purposes and the value it is bringing to their businesses.

The report, authored by Emeritus Professor Adrian Beck from the University of Leicester and the ECR Retail Loss Group and supported by Checkpoint Systems, also shows that more retailers than ever are recognizing the benefits of RFID and driving uptake within their organisations.

The report claims that as businesses are becoming more established in their use of RFID-generated data, they are gradually incorporating more use cases into their business-as-usual practices.

In particular, more and more retailers reported using RFID to streamline the audit process (as an alternative to infrequent organisational stock takes), which not only delivers considerable cost savings, but also provides more regular insights into the status of inventories. It also found that using RFID was having a significant impact on store processes.

While RFID has always been key to inventory accuracy, some companies are now using this data to further improve business activities such as reducing phantom out of stocks, improving rapid stock search and find tasks and developing an efficient ship from store (SFS) capability.

“Previous research has shown that in the appropriate retail context, RFID technologies can deliver clear-cut benefits in terms of inventory accuracy and the provision of valuable data. In this study we wanted to find out how its use evolved over time – understand what innovation looks like as well as delve into the benefits and limitations of the technology. While some retailers are certainly pushing the boundaries when it comes to RFID usage, others have adopted a much more incremental and gradual approach to its application,” Prof Beck commented.

Beyond the more traditional retail model, RFID was seen as a key facilitator in delivering omnichannel retailing by all those questioned. Without the inventory accuracy offered by RFID, few retailers believed they could reliably use their stores as fulfilment centres to output online orders.

The use of RFID to improve online order accuracy is also becoming more commonplace, to reduce errors in the picking and packing process, therefore improving customer satisfaction, with one retailer reporting a 90 per cent reduction in incorrect orders and customer complaints since introducing RFID into the process.

Looking to the future, one area where the benefits of RFID are starting to be tested is self-checkouts (SCO). While currently limited due to the need to have a 100% SKU tagging strategy in place, retailers are starting to recognize the benefits the technology could offer including increased speed of checkout, reduced likelihood of double scanning and thereby improved customer service, the report notes.

Another area where retailers also reported reaping the benefits of RFID was loss prevention. While none of those interviewed argued that reducing loss was the primary reason for investing in RFID, many acknowledged they were benefiting from it by using the technology to tackle refund frauds, enable dynamic loss product profiling, manage e-frauds and identify stolen products.

Mariano Tudela, VP Europe Sales at Checkpoint Systems, said: “It is great to hear that companies are looking beyond the traditional benefits of RFID to find new and innovative ways to use the technology and it will be very interesting to see how this develops over the coming years.

“One of the key evolutions for RFID recently has been in omnichannel retailing, and particularly following the Covid-19 pandemic, it is an area that we expect to see taking off in the future. RFID technology is the only way to ensure a successful omnichannel strategy, and retailers that don’t adapt their offering are likely to be left behind. With decades of expertise, Checkpoint Systems is market leader in RFID technology making it any business’ strategic partner of choice.”