In the last twelve months, RFID technology has received significant praise from influential leaders in the retail industry’s LP community.
“RFID gives retailers capabilities they have wanted for decades,” says noted criminologist Dr. Read Hayes, managing director of the Loss Prevention Research Council, a think tank and research hub with over ninety different retailers among its members. The technology provides a much more complete picture of specific theft incidents, including whether employees were involved, and to Hayes, this is quite exciting.
In January, at the National Retail Federation’s Big Show in New York, Hayes called RFID “a game changer,” saying it is now essential for effective loss detection and loss prevention.
“RFID has unlocked a level of data that we never thought possible,” says Joe Coll, vice president of asset protection at Macy’s. Coll has been using RFID for nearly a decade and he too calls RFID a game changer.
Why are they raving? Let’s go through some basics and then we can tie it all together.
RFID 101
An RFID label is essentially a serialized barcode that can be read via radio waves, without line of sight.
The chip within the RFID label does not contain any personally identifiable information, meaning there is no risk to consumer privacy. When activated by an RFID reader, the label relays back its serialized product information. Unpaid items concealed in knapsacks, shopping bags, or tucked inside a shoplifter’s clothing can typically be detected by a reader when the RFID labels are still present.
Stickers, paper tickets, and fabric tags are the most common forms of RFID labels. When a consumer returns an item with an RFID tag, it can be easily identified and authenticated as a product originally purchased in the store. Store personnel can also easily and quickly create a new tag.
The factory is typically where the RFID label is applied to the product or its packaging. Alternatively, distribution centers can apply an RFID label to any product that needs one.
Using handheld RFID scanning devices, an entire store’s inventory can often be counted in 20-60 minutes. For every SKU in the store, RFID gives a separate view of the store’s sales floor and stockroom inventory positions. This helps employees keep the store properly stocked. It also creates cleaner and richer data for enterprise systems, enabling better decision-making.
Stationary readers—often called Smart Exits—can be used at a store’s doors. They detect when a serialized RFID label leaves the store.
The software enables alarming if unpaid items exit the store. Logic-driven rules for a store’s alarms can be set (e.g. no alarm unless the cumulative value of the stolen goods exceeds $50). Theft events can be cross-referenced with video footage to identify perpetrators.
Retailers use RFID readers at their POS terminals to distinguish between sold and unsold merchandise. These readers can speed up checkouts considerably, which positively impacts the retailer and improves the shopper experience.
Some retailers have begun using inconspicuous overhead RFID readers that continuously monitor each item’s presence, location, and movement inside the store.
How RFID Changes the Game
Game Changer #1: Did my product show up?
Asset protection teams work with imperfect information. This starts from the moment a shipment arrives at the store from the distribution center. Since it’s rarely practical or economical to do an itemized check of each piece of merchandise received by the store, retailers often rely instead on what is known as an “assumed receipt” or “blind receipt.”
RFID scanning can be performed promptly upon the arrival of a shipment or at any point thereafter, even after the goods have been unpacked and stocked. The first RFID scan of an item—regardless of whether the item is sitting in the stockroom or on the sales floor—serves as confirmation that the item arrived.
Game Changer #2: Is my product still here?
RFID-enabled Smart Exits are designed to reveal theft immediately. Many retailers have installed these special readers at the doors of their stores and sometimes even at employee exits.
But even without Smart Exits, the regular RFID scans of the entire store— which are performed primarily for the benefit of store operators and merchants—expose the absence of merchandise. This is immensely valuable. With RFID, many retailers perform these counts weekly, and some do them daily, significantly improving inventory accuracy and on-shelf availability.
Game Changer #3: Exactly when did my product go missing?
In the ideal scenario, the store has installed Smart Exits and gets a more precise answer to this question. The ability to narrow down the window of time in which an item disappeared will help an LP team identify who they are after and also allow them to adjust a store’s defensive tactics.
Game Changer #4: Who took my product and how?
When a retailer uses a Smart Exit—especially when the serial numbers of purchased goods are captured at POS—it becomes much simpler to pinpoint theft incidents. You can time‑stamp the moment the stolen item left the store and cross-reference it with video footage. Once the perpetrators’ identities are known, additional footage of their time inside the store can be immensely helpful.
Behaviors can be studied carefully. The identified thief might routinely use a fitting room before leaving the store. Their accomplice might strategically deposit the soon-to-be stolen items within a section of the sales floor where it is easier for the thief to stash the goods discreetly. Or perhaps the accomplices deliberately distract store personnel while their friend conceals merchandise.
RFID may help investigators link the activity of one thief with another. Thieves sometimes get help from dishonest employees, including highly trusted store managers and other long-tenured frontline team members.
Game Changer #5: How often have the thieves hit my store?
Software, artificial intelligence, and video technology can significantly accelerate investigations. What might have taken over six months to complete can now be done in a matter of weeks.
Proof of serial criminal behavior can also help demonstrate that a specific individual requires more serious intervention, whatever the appropriate remedies.
Game Changer #6: What’s the dollar value of the merchandise the thieves have stolen from my company?
The ability to aggregate a person’s shoplifting events is critical to “packaging up” cases of sufficient strength and monetary value to attract and maintain the interest of busy prosecutors and legislators.
It’s not just about the likelihood of favorable verdicts in the cases that prosecutors choose to pursue. Low-level criminals are more likely to be persuaded to disclose critical information about people higher up the food chain when faced with more serious charges. The aggregation of case value using RFID serialization is convincing courtroom evidence and hard to dispute—as close to product DNA as we may get.
Game Changer #7: Who’s helping to fence my stolen product?
RFID labels are serialized, and radio waves can read through walls.
Investigators now have a new way of identifying stolen goods in flea markets, hair and nail salons, and other notorious “fence locations.” For example, law enforcement can put RFID to work when a search warrant is obtained to open and search a storage locker.
When stolen goods are located, they can be traced back to the stores they were stolen from or even traced to specific incidents of cargo or delivery theft. This sheds greater light on the network of criminals working together. It also makes it much simpler for law enforcement to return goods to brands and retailers, which today is a cumbersome challenge.
Game Changer #8: Is that online seller selling my stolen product?
The ease with which stolen goods can be sold online has played a large role in the rise of retail theft. Retailers, consumer brands, and law enforcement agree that online marketplace owners could be doing much more to prevent the sale of stolen merchandise.
A new way for a retailer to prove that a seller in an online marketplace is selling stolen items is to have its investigators make purchases from suspicious sellers and compare an item’s serialized RFID label to the retailer’s serialized transaction logs. Or the item can be proven to have been stolen cargo.
The Bottom Line
Macy’s is among an expanding group of retailers who have fully integrated RFID into their LP toolbox over the past ten years. These teams have seen for themselves that a whole new set of opportunities is unlocked when RFID is added to their existing mix of technology solutions and protection measures.
A growing group of LP leaders have recognized the game-changing nature of RFID. The tech has already changed the way many retailers operate their stores. Now, it’s time for the rest of the LP community to catch up with them.
