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How Might Your LP Operation Benefit from Retail’s RFID Revolution?

Sponsored by Checkpoint

Loss prevention executives are contending with a slew of challenges—budgetary pressures chief among them—yet there is reason for optimism. The same technology that can help a retailer survive in a formidable, shifting retail environment can serve as the foundation of an LP operation that combats loss more successfully than it ever has before.

“Today, you have to be an omni-channel retailer,” says Carl Rysdon, vice president of sales at Checkpoint. Retailers have no other path to survival, he suggested. “You have to be able to deliver products to customers when and however they want it—whether it’s in store, online, or buy online and pick up in store, or whatever.”

This business requirement is forcing retailers to up their game when it comes to managing inventory. You can’t operate on 60 to 70 percent inventory accuracy if you’re going to offer buy online and pick up in store, said Rysdon. “You need to be sure that the product is going to be there.”

To meet the emerging business requirement for better inventory accuracy, retailers are aggressively adopting radio frequency identification (RFID) technology. “This has been the development that has really unlocked RFID,” said Rysdon, building on the technology’s existing momentum from the creation of global standards for RFID tags and the development of new use cases. “At this point, the spigot is on.”

And that is good for loss prevention.

“LP can ride that wave and take advantage of the opportunities it creates,” said Checkpoint’s Rysdon. Checkpoint is a leader in the RFID revolution—offering “source-to-shopper” solutions that include a full complement of RFID tags and labels that go on merchandise, a full suite of tag readers, and software to make use of all the data that systems generate, in addition to consultants who show retailers where and how to employ these tools.

Surveys indicate that the top reason for implementing an RFID solution is improved inventory accuracy, which translates into reduced out-of-stock and better on-floor availability of merchandise. Several of Checkpoint’s apparel retail and department store customers have increased on-shelf availability by more than 20 percent with RFID and experienced a 10 to 15 percent sales uplift for RFID-tagged merchandise. As it relates to omni-channel fulfillment, its customers have reportedly been able to double the fulfillment speed with near-perfect order accuracy when using RFID-enabled process automation.

When retailers only audit a small percentage of shipments from a small percentage of vendors, errors creep into the supply chain. But if distribution centers use RFID to conduct 100 percent auditing of incoming merchandise, stores get exactly what they expect. “In that way, you start out on the right footing with an accurate baseline,” explained Rysdon. “Once or twice a year, you’ll find errors in an audit, but they were mistakes that were made a long time before. When you have inaccurate data from the start, you’re just chasing ghosts.”

The experience of retailers makes it clear that information accuracy enhances merchandising, store operations, and supply chain. Information accuracy is also at the heart of LP programs and their ability to enhance the business. “RFID is the only solution today that gives you an understanding of what you have down to the item, and that is a huge benefit—to be able to correct errors before they hit the store,” explained Rysdon.

At the store level, one LP application for a retailer’s RFID investment is to also use it for electronic article surveillance, something that Rysdon said retailers are increasingly doing when opening new stores, as well as when legacy EAS systems are at a point where they need replacing or updating. Not only can RFID alarm the system at the store exit so staff is alerted when an item is removed, it can also tell the retailer exactly what item(s) were part of the attempted theft and—in shoplifting tests—the technology performs admirably as a loss prevention tool.

“When you look at RFID, you’re looking at the Internet of Things,” explained Rysdon. “Each of these tags is a programmable sensor, and all the way through the enterprise you can monitor everything that’s going on with it.” It is able to yield intelligence on any number of processes, from the speed of production to how long a product sits on a store shelf before being sold.

It’s that visibility that LP can leverage, including in creative ways. For example, by positioning RFID readers at entrances to dressing rooms, staff can be alerted if customers enter them with an unusual combination of items that are suggestive of a shoplifting scheme. Or, using hand-held readers, LP can frequently and efficiently do their own audits of high-theft items or locations. “It’s easy to employ these solutions on a tactical basis to stay on top of problem areas,” said Rysdon. He added that because inventory counts can be conducted more quickly and more frequently, the technology also acts to deter and identify instances of internal theft.

RFID investment is primarily being driven on the retail side by supply chain and information technology departments, but LP should work to involve itself in the decision making process to have its needs and potential uses included. For example, LP should examine the types of tags under consideration to examine how they will fit LP’s purposes, said Rysdon. Ones that are affixed to price tags can be more easily defeated, for example. LP should also lobby for pushing use of RFID up the supply chain so that distribution centers can audit all the merchandise that comes in and errors can be corrected throughout the supply chain. Finally, LP should educate itself about the full range of uses for the technology and the data it can generate so that it can accurately compare the total cost of ownership of RFID technology to other LP solutions.

These are certainly trying times for LP generally, so the rapid rise in RFID adoption is a welcome trend. “We’re getting into an interesting place with RFID with a lot of momentum behind it as an attractive way to reduce total shrink,” said Checkpoint’s Rysdon. “Now the question for LP is: how are you going to use it?”

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