Why Should Retailers Adopt RFID?

retailer-tag-rfid-blogMany retailers may have a common concern: when it comes to RFID, am I ahead of, behind or out of the game? Clearly, RFID adoption is on their minds.

In order to be competitive in the marketplace, retailers must have high inventory accuracy. According to studies from Auburn University and the University of Arkansas, RFID can improve inventory accuracy from an industry average of 60% or less to more than 95%. And if retailers can improve the inventory accuracy to 95%, many retail problems are solved or reduced — out-of-stocks go down, safety stock or unnecessary stock declines, and sales and/or margins improve.

Now the answers to the retailers’ question are clear: If you have fully deployed RFID throughout your stores — tagging all items in all stores — you are ahead. If you have not started considering potential uses for RFID in your stores, you are behind.

Over the past few years, there have been a significant number of retailers adopting RFID, particularly those in apparel (both specialty and department stores). Yet the number of retailers not deploying the technology is still large, too.

However, the fact is that any retailer without RFID has an inventory accuracy problem. Many retailers know they have a problem but do not want to admit it, while others even fail to realize it — they look at existing data and assume all is well, yet in fact they are relying on bad information. There are still some retailers who realize they have a problem and spend lots of resources trying to correct it. They typically hire more workers to manually scan the barcodes on items, which is expensive and inefficient.

To solve a problem, one needs to acknowledge the problem. Then good data is needed to fix the problem. Finally it comes to addressing the related cost concerns. Tracking items with RFID provides good data and is more cost-effective than increasing labor resources.

In the near future, retailers will require RFID to be competitive. It’s time for all retailers to ask, “Am I using or planning to use RFID to improve inventory accuracy?” If the answer is no, it’s time to take steps to get into the game.