Has the Time Arrived—Finally—for RFID?

Forward-thinking LP executives are adopting a hybrid RFID solution to build a foundation for the business.

Sponsored by Nedap

After years of false starts and a measure of false promises, retailers are finally starting to realize the potential of radio frequency identification (RFID) technology. And even if it takes a while for a retailer to develop a solution that harnesses the technology’s full power—to both manage inventory and prevent loss—there is no reason not to start building a foundation, realizing benefits, and moving in that direction.

During his 20 years in the retail industry, Patrick O’Leary says it seems that RFID’s promise has always been just around the corner—but stubbornly out of reach. “It was always that RFID would take off in five years, and then in the next five years, and then the next—and still nothing,” said O’Leary, Vice President and General Manager at Nedap Retail Americas, a leading provider of loss prevention and stock management solutions for the global retail sector.

In the last five years, however, the long-awaited transformation has started to take shape—but without the hype of decades past. The change is happening now in a more mature, measured fashion—one that appreciates you can’t reach the finish line without smaller steps along the way.

“Some LP teams are using a hybrid approach, as they evolve their EAS technology into a total RFID merchandise solution,” said O’Leary. “You don’t have to go full RFID all at once. You can take baby steps, and then slowly evolve to the end game for RFID that everyone has been envisioning.”

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It’s an approach DSW, the footwear and accessories retailer, has taken. The company has upgraded to RFID technology for EAS, but is also focused on the future, working toward a solution with the ability to track stock levels, assist with investigations, and provide analytics. “The association piece isn’t yet there,” said O’Leary. “But that is something that they are building toward in the future. It’s an increasingly popular strategy,” he added. “We’re seeing a lot of people say, ‘Let’s at least prepare and grow to it.’”

Using an open technology environment, retailers can now put in place a foundation to which they can add functionality—all as they work toward the ultimate goal of making sure that the right merchandise is available when customers come in and to replace items as needed, whether they’ve been stolen, damaged, or purchased. In the end, it’s all about enhancing merchandise availability and boosting sales.

In shoplifting tests, the technology has proven that it can perform admirably as a loss prevention tool. At the same time, RFID at the item level can improve inventory accuracy and efficiency. For example, RFID can prevent the too-frequent problem of inventory systems showing product available for sale when it’s not. RFID is frequently used in retail environments for such tasks as item replenishment, source tracking, in-store fulfillment, product authentication, and checkout.

So, are retailers adopting RFID for inventory and then adding LP? Or are they implementing RFID for LP and then adding the inventory piece? From what O’Leary has seen, it’s about fifty-fifty.

“More forward-thinking LP leaders want to learn about the building blocks of RFID, to get to where they can add value to their department by putting that infrastructure in place that can support the rest of the company,” said O’Leary. “They understand the importance of devising strategies that meet their LP goals in a way that also serves the company’s overall direction.”

“Coming up with a successful hybrid approach requires LP to further its conversations with operational counterparts that may be more focused on RFID,” said O’Leary, which is exactly what DSW did to move the ball forward. “We partnered with store construction, store operations, training and development, and other departments within DSW to make sure this project was a success,” said Matt Brooks, DSW’s senior manager of investigations.

Following a successful RFP process, which included a pilot phase, DSW selected Nedap’s !D Top RFID overhead reader and completed a chain-wide rollout. The ceiling-mounted RFID reader works as a theft-prevention solution without software integration, but in the future can easily be integrated into any total RFID solution for in-store merchandise tracking. It offers a first step with RFID while immediately providing effective EAS, reliable detection, and false-alarm prevention through tag filtering and direction detection.

“RFID was a new technology for us, so this was a high-profile project,” said Brooks. “We had dabbled in RFID with a couple proof-of-concepts with other providers, but we had never rolled chain-wide like this before.”

One reason for their choice of Nedap’s overhead RFID reader was its aesthetics and minimal impact on store appearance, another factor that is becoming increasingly important to specialty retailers, according to O’Leary. “When retailers are looking for a store environment that is warm, open, and welcoming, they love that they don’t need pedestals at the front door. And, as an overhead solution, there is no need to trench. It’s a sleek solution,” he said.

LP and retail business technology are no longer separate areas, and RFID provides an illuminating example for why LP executives should consider the company’s broader business goals when addressing asset protection. Looking at RFID solely through an LP lens may not seem like a worthwhile investment, but the value proposition changes when you consider that you’re investing in a foundation that facilitates inventory accuracy—something that is essential to omni-channel retailing success.

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