RFID adoption is about to explode, and retailers are igniting the fuse. Macy’s recently announced that, following highly successful RFID pilots, they will be expanding item-level RFID tagging to 30 percent of the merchandise in all 850 Macy’s and Bl
oomingdale’s stores. This represents an $8 billion investment.
The overall RFID market is predicted to exceed $3.2 billion by 2015, with much of that growth driven by fashion, apparel, accessory and luxury goods retailers. While its the big commitments by high-profile stores like Wal-Mart, Macy’s/Bloomingdales, Target, J.C. Penny, Levi’s and others that make the headlines, retailers of all sizes are piloting, deploying or scaling RFID “under the radar.”
The accelerated activity underscores what observers, analysts and experts are saying, and what I have been forecasting all
along: RFID will soon be “ubiquitous” in the retail supply chain. This means that small to mid-sized retailers who have been waiting to see where RFID is headed, should begin preparing for their pilots now in order to stay competitive within their category. Item-level RFID isn’t just for the “Big Chains” any more.
The many benefits of RFID technology, and the positive impact on the retail bottom line, are too compelling for retailers of any size to overlook. RFID’s ability to count faster and more accurately than other existing methods (manual or bar code) helps any retailer or merchandiser to:
- Reduce Out-of-Stocks
- Optimize inventory
- Reduce errors along the supply chain
- Forecast more accurately
- Capture important loss intelligence
- Gain insights into customer behavior patterns
Those of us who work with the technology every day are convinced that the full potential of RFID for retail has not yet been tapped. In fact, almost everyone agrees we are just “scratching the surface” of the capabilities and possible applications for this powerful tool. At every level of RFID use, the ultimate goal is to create a better customer experience, and more sales, by having “the right merchandise in the right place at the right time” for customers.
In retail, “getting it right” for the customer is critical. Feedback from retailers indicates that RFID has the highest bottom line impact when used to count items that turn over quickly; items that require reordering or restocking over many replenishment periods. Because RFID can complete a cycle count in “seconds”, retailers are able to conduct cycle counts more frequently, or whenever desired to ensure that no customer is disappointed, and no sales are lost, because the item was not on the shelf.
For smaller boutique retailers with limited backroom space and a smaller margin for errors in forecasting or ordering, RFID delivers the accurate counts essential for optimal, and very localized, ordering and stocking. In pilots, RFID has proven
to achieve 99+ percent accuracy.
Beyond inventory management, retailers can capture powerful metrics that can be used to enhance branding and customer loyalty campaigns, improving sales and customer service. The same positive benefits that are accruing to large retailers can be gained by smaller specialty stores; and for small to mid-sized retailers, these benefits often have a greater impact on the business.
With less structural complexity, fewer players involved and less product to tag up, small to mid-sized retailers have a distinct advantage over the big chains, and can implement a pilot more quickly. It’s easier to gain that all-important support from the C-level team because many CEOs and top executives actually work onsite in the stores.
Based on their pilots, the largest retailers, including Macy’s, are reporting significant sales lift attributable to RFID. They are benchmarking six months as the payback period. If you are a small to mid-sized retailer, RFID can give a hefty boost to your bottom line. There are other factors that can make your RFID pilot or implementation even more cost efficient. Truecount, for example, offers options for cloud-based hosting and SaaS pricing models that reduce the upfront investments for implementation.
Truecount has a background in retail as well as RFID technology, so we maintain a strong focus on keeping RFID simple and straight-forward. The Truecount approach makes RFID exceptionally accessible to “not so large” retail firms and merchandisers while delivering top-tier performance and the most advanced solution.
Recently, Dr. Bill Hardgrave, an independent RFID research authority, pointed out that the momentum for RFID implementation has never been greater, with more RFID tagging taking place in the first quarter of 2011 than in all previous years combined. The train has left the station. The tipping point—the point at which RFID will become the universal industry standard—is very near. RFID is the next big transformation for the entire retail supply chain, from the manufacturing source to the sales room floor.
Now is the time to begin planning to add RFID to your operations, to stay competitive and to meet consumer demands. RFID isn’t just for the “big stores” anymore.