RFID tech drives higher profits for retailers

With item-level RFID, retailers can transform their returns operations and gain a ROI by reducing labor time and theft, preventing errors and ensuring the on-shelf availability of inventory.
Elizabeth Christenson
Editor, Retail Leader
Elizabeth Christenson profile picture

With the adoption of item-level RFID solutions rapidly growing, this year SML, a global leader in retail RFID technology and solutions with a presence in 20 countries, and PervasID, a company providing UHF RFID reader systems for automating inventory and asset tracking, partnered to deliver a combination of PervasID’s passive RFID reader technology and SML's Clarity enterprise software solutions for retail. The new tech allows retailers to capture hands-free data regarding the movement of goods within a store or a specific zone, without requiring staff members to conduct manual inventory counts via a handheld reader.

Retail Leader spoke with Dean Frew, chief technology officer and senior vice president of RFID solutions at SML Group and founder of SML RFID, about how RFID solutions allow retailers to gain a return on investment (ROI) by reducing labor time and theft, preventing errors and ensuring the on-shelf availability of inventory.

Retail Leader (RL): How are RFID-based technology solutions revolutionizing the retail industry?

Dean Frew
Dean Frew

Retail Leader (RL): How are RFID-based technology solutions revolutionizing the retail industry?

Dean Frew:Item-Level RFID technology allows retailers to better view their on-hand inventory by scanning hundreds of items within seconds, enabling stock accuracies up to 93 to 99%. With an accurate view of inventory in near real-time throughout every stage of the supply chain, retailers can enhance efficiency at every touchpoint of their operations and ensure that in-store stock remains replenished at all times. Retailers can continually maximize their sales by optimizing product availability across all locations.

Beyond leveraging item-level RFID to optimize inventory management, retailers can harness the technology to improve numerous in-store operational processes and the customer experience. With omnichannel fulfillment options such as buy online, pickup in-store (BOPIS) and buy online, ship from store (BOSFS) becoming increasingly popular for consumers, RFID technology can provide in-store associates with the tools they need to locate items quickly and fulfill orders seamlessly.

RL: Part Two of SML’s State of Retail 2022/2023 Insight Report highlighted that 32% of retailers claim to spend too much time manually processing returns. How does RFID help retailers reduce this time?

Frew: Returns can be extremely time-consuming for retailers — especially with the ongoing labor shortage in mind — and the manual processing of individual returned items, which introduces the potential for human error, only creates more challenges for retailers. When a product is returned, it goes through several stages of the reverse supply chain before it can be resold, taking weeks or even months before getting back to the shop floor from transport, cleaning, repackaging and restocking.

As products spend more time away from the shop floor, the price of each item continues to fall. Our research also found that 42% of returned items are sold at a discounted price, with 12% not resold at all.

With item-level RFID, retailers can completely transform their returns operations. The technology enables retailers to track and trace inventory effectively throughout the reverse supply chain and helps minimize the time spent on processing returns. As a result, items can be processed faster and sent back to the shop floor much quicker. This increases the possibility of selling items at full price while reducing the number of staff required to process returned items within the supply chain.

RL: More than a quarter (29%) of retailers claim that poor visibility of inventory is one of the major challenges to providing a seamless customer experience. How does RFID improve the customer experience?

Frew: Today’s customer expects to shop at their own convenience, whether that is online, in-store or a mixture of both. With RFID technology, retailers can create this convenience by facilitating seamless experiences through omnichannel purchasing options, such as BOPIS and BORIS.

On top of enhanced omnichannel capabilities, with item-level RFID deployed, staff in-store can gain accurate product information in seconds. Rather than physically leaving the customer and finding products to determine whether items are available in-store, associates can check stock levels in seconds through a tablet or mobile device. With less time spent locating items, staff can significantly shorten the time customers have to wait for their items. Instead, they receive quick, accurate information. Moreover, with clear inventory visibility, associates can suggest alternative items if a particular product is out-of-stock, only further contributing to an improved in-store experience.

RL: How will retailers see enhanced ROI with RFID? How will they realize this return?

Frew: When retailers adopt RFID technology, they often experience the same three tiers of ROI. The first tier focuses on enhanced inventory management — enabling retailers to better employ their workforce for the most effective functions for a business. Secondly, loss prevention and delivering an enhanced customer experience lead to overall increased revenue. Finally, they also tend to see improved more comprehensive store operations, such as a more effective omnichannel offering and increased checkout speed.

 RFID technology can significantly impact a retail business in a range of areas — each helping the retailer to become more productive and efficient as a business. Not only does the technology drive sales and deliver improved profits, but it also enables retailers to deliver a high-quality customer experience, which is crucial for long-term business success.

RL: Where do you see the greatest potential for grocery, drug and convenience retailers to use RFID?

Frew: The use of RFID in the grocery and quick-service restaurant market is one of the next big vertical markets that will develop. Government regulations with penalties in Europe and U.S. are requiring food traceability and reduced waste. There is no plausible way to address these mandates at scale without the use of automation. RFID is the only technology that will assist in automating data collection and inventory management.