Foundation of RFID Technology Yields Smarter Loss Prevention Strategy

RFID technology in retail

Since 2003, when Walmart began pushing suppliers to use RFID, many people have been waiting for RFID technology to transform retail operations. The revolution has been more of an evolution, however, with privacy concerns and implementation challenges acting as a drag on adoption. But the case for it has never really diminished, and many asset protection departments are finding it invaluable for identifying causes of stock loss and paving the path to smarter protection—and many more will in the years to come.

Retailers have not been adopting RFID technology as fast as expected, but it’s making inroads and has gained the trust of retail stores, said researchers in a presentation to the 2020 International Textile and Apparel Association conference, “The current adoption and future use of RFID tags.” In their investigation, researchers said “RFID tags or labels are easy to find at a variety of merchants regardless of the size of the RFID device.”

They noted that modern RFID sensors, specifically for retail, are made with a high memory capacity that is superior to a typical barcode, resulting in successful applications that have lowered inventory loss and curbed counterfeiting of luxury goods. Store-level RFID has improved with newer label readers for stacks of garments, improvements to identify inventory outages, and store mapping to improve merchandise placement. The future looks even brighter.

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Retail Examples of RFID Technology

“The future of RFID is rapidly changing as RFID technology has the potential to change the retail, textile, health, and sportswear industries by using it to track items throughout the sourcing chain until final disposal,” researchers said. Burberry is an example, where “RFID tags tell the story behind their garments as their tags communicate with consumer’s phones and give information where the products were produced or recommend wearing options.” With a wide variety of uses, increased information, and ease of shopping, retailers will develop new uses for RFID tags in the future, they predict.

Joe Coll
Joe Coll

If true, then more asset protection professionals will have access to data that can remove the guesswork from theft prevention strategy and make it nimbler in response to threats, according to Joe Coll, vice president asset protection operations and strategy at Macy’s, in a March webinar presented by the Loss Prevention Foundation in partnership with Sensormatic Solutions, “Retail Disruption: Impact on Asset Protection.”

Coll explained how Macy’s asset protection strategy has tracked the company’s adoption of RFID technology and its penetration into its operations. The aim initially was to achieve better visibility into their products and to make sure that things like display shoes were accurately represented on the sales floor, he said. For example, if a store owned 100 different pairs of women shoes, one quick sweep of a selling floor would tell them if all 100 pairs were in fact there.

“This replaced the old method of looking at sales reports and saying, ‘the red pump isn’t selling, we must not need it in that store,’ when it might not be selling because the customer didn’t even know the shoe was in the store because it wasn’t represented on the selling floor,” said Coll. That provided an “a-ha moment” for asset protection, which recognized the opportunity to unlock data for insights into product protection strategy.

Previously, a yearly inventory in January of all the bar codes in a building would tell AP what they’d lost, but when items went missing, they couldn’t know. They could sometimes narrow it down to the season it was lost might by the type of product, but that was as close as they could get. But with a foundation of RFID technology, asset protection could now learn from monthly cycle counts, which told them if an item had been lost at a location within the previous 30 days.

“Now you’ve taken a 12-month inventory process, and you’ve compressed it down to once a month,” Coll explained. “So, we got a lot smarter in a lot of our shortage awareness programs, our deterrence programs, and how we protect our product—with the ability every single month to take a final exam and ask, ‘the actions we took, did they work?’ If they didn’t, change them. If they did, roll them out to additional locations or to additional merchandise inside the building that maybe we’re not protecting in that way. We were able to get smarter every single month, as we led up to our final financial inventory in January.”

Other Uses for RFID

As awesome as that was, that wasn’t the end of AP leveraging its stores’ investment in RFID technology. “We got greedy,” Coll said.

Smart exits—network connected EAS pedestals that pick up EAS tags, scan for RFID, and is tied into surveillance video—provides real-time data on what products they are losing out of its stores. “It not only gives us—down to the minute—the type of product leaving our building, but it answers some of the questions about who is taking product out of our buildings,” said Coll. “Because now I am seeing every loss event and can tie it back to 15 people who are taking 60 percent of the EPC without paying for it.”

It’s like TSA for Macy’s stores, he suggested, allowing the company to screen every individual as they leave so they can focus on bad actors and take steps to apprehend them. And it provides real intelligence that replaces the ‘sense’ that AP executives may have for the percentage of loss that can be attributed to ORC and informs them if their assumptions are accurate.

Investigations and working with law enforcement are also made easier, as RFID technology provides a digital fingerprint for Macy’s products. By wanding a product at a fence location, investigators can confirm whether it came from a particular store, and the video and data can then show when that product left a building and with whom. “It wraps up the case nicely for law enforcement,” said Coll.

RFID technology has put asset protection on an exciting journey. Coll explained, “It’s foundational. You put it on products and its limitless on what you can do inside your store and how you can use it to protect your merchandise … and identify theft trends,” he said. “It answers the question of, ‘how do you know who the problem is?’ by unlocking data that’s never been available in the past.”

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