Future of RFID: The Cost of Inaccurate Inventory
By Dean Frew, CTO and Senior VP of RFID Solutions at SML Group
Amidst the rising cost of living, meeting rapidly evolving customer expectations is an ongoing challenge for retailers. Not only can this negatively impact their sales and the customer experience, but it can also slow down their long-term growth.
As consumers show a clear appetite for in-store experience, brick-and-mortar stores have started to bounce back, with customers flooding the high-street. In fact, 94% of consumers have returned to shopping at physical stores as of 2022. It’s clear that most customers in America want to return to shopping in person, with only 6% remaining strictly online shoppers.
As customers flock to physical stores, retailers must be prepared to have the right items and the right place. Out-of-stock products can have an adverse impact on customers and retailers alike. It can ruin customers’ shopping experience and become the most damaging factor for retailers who aim to live up to customer expectations. Not only does this negatively impact sales, but it can also damage consumer loyalty and brand perception — driving customers toward a competitor. To retain and satisfy customers, retailers must provide peace of mind that the online items are available to pick up in-store where and when they want them.
There is, however, a solution that can significantly improve inventory accuracy and address these challenges: Radio Frequency Identification (RFID) technology. By leveraging Item-level RFID, retailers can transform their inventory management processes, mitigate the cost of inaccurate inventory, streamline returns and improve their operations significantly.
RFID’s Role in Driving Inventory Accuracy
RFID technology plays a crucial role in increasing inventory accuracy. Manual inventory counting methods are time-consuming and error-prone, leading to significant discrepancies.
To drive accuracy, retailers must leverage the latest item-level RFID solutions to know precisely what is in stock at all times. With the technology deployed, items are scanned on entry and exit, providing retailers with real-time inventory visibility across all locations. This eliminates human error and the need for manual stock counting, improving accuracy up to 93-99%. This further enhances operational efficiency and helps retailers deliver an enhanced customer experience as staff spend less time performing manual inventory counts, and more time assisting customers in-store.
RFID-powered solutions deliver multiple benefits beyond just inventory accuracy. Retailers can reduce losses, elevate customer experience, maximize sales, and reduce cancellation rates of BOPIS (Buy Online, Pick Up In-Store). RFID technology allows retailers to track individual items throughout the supply chain and improves BOPIS operations, enabling accurate order fulfillment and reducing the likelihood of cancellations.
A Myriad of Benefits of RFID
The technology’s inventory management capabilities enable retailers to optimize their stock levels, preventing stockouts and overstocking and assuring products are always available. For customers, this improves the convenience and dependability of in-store purchases. This level of visibility helps prevent loss and theft by quickly identifying discrepancies between expected and actual inventory. Retail shrink, an ongoing challenge for retailers, can be significantly reduced through the tracking capabilities of RFID. By reducing losses, retailers can protect their profit margins by minimizing the financial impact of shrinkage.
Additionally, item-level RFID can also enable retailers to deal with the returns dilemma that continues to create hurdles in retailers’ growth. According to a recent research report, 30% of sold items are eventually returned. This further costs retailers a significant amount of time and labor. In fact, 32% of retailers claim that they spend too much time manually processing individual returned merchandise. With item-level technology deployed, retailers can gain instant visibility and access to reverse supply chains. This further allows them to streamline back-end operations and send the returned products back to the shop floor much quicker. This helps retailers to resell more returned items at full price.
Furthermore, RFID allows retailers to provide accurate and up-to-date information to customers. With this technology in place, customers can quickly locate in-store or online products, ensuring their desired items are available when needed. This enhanced visibility eliminates the frustration of out-of-stock situations and improves overall customer satisfaction.
The Promising Future of RFID: Advancements and Opportunities
The future of RFID is promising, with retailers realizing its importance and the potential the technology holds. The RFID market size is projected to reach $35.6 billion by 2030 from $14.5 billion in 2022; it is expected to grow at a CAGR of 11.9% during the forecast period. Today, the technology not only serves traditional inventory management purposes but also acts as a great enabler of high-quality customer experiences, facilitating modern retail offerings across many industries from fashion and apparel to grocery stores and quick service restaurants (QSR).
As brick-and-mortar stores continue to make a comeback, retailers will need to harness RFID to its full potential to meet customers’ evolving expectations. The future is expected to see retailers deploy item-level RFID combined with the latest innovative solutions to gain the unique ability to address pain points and provide a better experience, from the back-end supply chain all the way to mobile and seamless self-checkout.
RFID’s potential to revolutionize the retail industry is immense, and it is only likely to boost in the near future with new disruptive innovations emerging. Retailers who begin to advance their RFID utilization today can have a significant competitive edge in the future. It would not be an exaggeration to say that RFID will not be a choice but a necessity to thrive in the retail industry.