Modern RFID solutions can reset retail economics, lowering costs, and boosting revenue. Research by McKinsey & Company demonstrated the benefits of the application of RFID technology in retail and reported that it delivers:

More than 25 per cent improvements in inventory accuracy.

0 to 3.5 per cent increases in full-price sell-through tied to better management and lower out-of-stock occurrences.

10 to15 per cent reductions in labour hours related to inventory management.

Reductions in shrinkage and theft that can raise revenue by up to 1.5 per cent.

Advantages of RFID technology in retail asset management

RFID technology is used as an effective alternative to manual asset identification which uses barcoding where items need to be scanned one at a time.Being able to scan hundreds of assets at one time is a key advantage of using RFID technology in retail. RFID tagging for stock control offers several advantages over other methods such as barcode labelling.These advantages include:

RFID tagging allows for quick and easy stock checks that would otherwise take days to complete.

RFID Tags can be read remotely, often at a distance of several metres.

Several tags can be read at once, enabling an entire pallet-load of products to be checked simultaneously.

RFID Tags can be given unique identification codes so that individual products can be tracked.

Certain types of RFID tags can be overwritten, enabling information about items to be updated, for example, when they are moved from one part of a factory to another.

RFID applications and their advantages in the retail industry

This versatile technology can unlock value across three main categories: inventory tracking, store operations, and customer experience as described here:

1.Inventory tracking

Inventory management, a critical element of the supply chain, is the tracking of inventory from manufacturers to warehouses and from these facilities to a point of sale. The goal of inventory management is to have the right products in the right place at the right time. This requires inventory visibility–knowing when to order, how much to order and where to store stock.

Inventory tracking is the most widely used RFID application in retail. RFID technology can provide accurate product location information while reducing costs. The complexity of inventory management, picking, packing and delivery are all made easier and faster with the use of RFIDs. For instance, RFID can provide highly accurate information about the exact location of an item in the supply chain, such as on a truck or in a specific store.

As RFID tags are unique and can’t be forged, the technology also reduces costs related to missing items in the supply chain by identifying and handling discrepancies.

Proven to improve efficiency, accuracy, cut costs and boost sales

A significant benefit of opting for RFID technology is improved accuracy levels in inventory management. In a case study that featured 10 industry leaders, the inventory accuracy of retailers rose from 65-75% to 93-99% with the introduction of RFID asset tracking systems. Clothes retailer, River Island, took its stock accuracy from 70% to 98% by implementing an effective RFID system. In turn, they have seen a significant boost in sales and are now able to ensure that the most popular product lines are always stocked.

Research by McKinsey & Company (in 2021) also highlighted that Decathlon, a sports-equipment retailer with over 1,600 stores in more than 50 countries, tags more than 85.0 per cent of its items, tripling labour productivity and cutting costs to raise revenue by 2.5 per cent.

2. Store operations Efficient store management

This RFID acquired inventory data helps store managers plan and adjust staffing levels, the timing of truck arrivals, and pick timing for online orders.  It also ensures just in time replenishment of store stocks and reduces the risk of overstocking.

Scan and go with increased security

Many retailers now use scan-and-go RFID solutions to allow shoppers to scan and pay for items with their smartphones or RFID scanner. RFID tags can make self-checkout even faster and more accurate and allow customers to escape the checkout queue enhancing their shopping experience.

In addition, the tags improve stock security. Thefts are reduced by positioning tag-readers at points of high risk, such as exits, thus automatically triggering alarms. As RFID tags are unique and can't be copied, they also enable the easy identification of fraudulent product returns and faster processing of legitimate returns.

3. Customer experience

While the most valuable RFID use cases today are in inventory tracking and store operations, advances in the uses of RFID technology in the retail industry take the shopping experience to a new level.These new applications can attract customers looking for dynamic new experiences, drive revenue,and yield valuable customer insights,which can be utilised for cross-selling purposes.

With a multitude of proven benefits,the use of RFID technology to enhance customer experience is growing in popularity with retailers.Some interesting examples of RFID applications used to boost such experiences were published in the research report by McKinsey & Company, which referred to this type of use of RFID technology as‘RFID-enabled activation’. The report stated:"RFID-enabled activation can take a variety of forms. Some retailers now provide‘smart’ fitting rooms, where shoppers get customised information about other sizes and colours in stock, learn how to style a garment, and receive personalized recommendations for items that will complete a look.The high-tech, RFID-enabled fitting rooms take the shopper on a digital journey of new styles, product details, and the Chanel lifestyle all without leaving the room. In return, retailers can gather high-level data, such as how many items customers try on and conversion and abandon rates by product."