From vehicle and pet tracking to cargo and supply chain logistics, radio frequency identification (RFID) technology has plenty of use cases. One of particular interest to retailers is the use of RFID technology to level up their inventory-management processes. As RFID costs have fallen, an increasing number of retailers are looking to this technology to solve some of the problems traditionally associated with managing stock.
Efficient inventory management is hugely important for retailers. Retail profit margins are often lower than those of businesses in other sectors. For example, grocery and food retailers in the United States have an average net margin of just 1.96 percent. Such low margins make it particularly important to manage stock to minimize product loss, whether it’s due to expired dates, theft, shrinkage or any other reason. This is where RFID tags come in so handy.
The Benefits of RFID for Retailers
Tamas Kadar
While barcodes have been widely used for inventory management since the early 1970s, they have several limitations that RFID tagging overcomes. RFID tags, for example, can be read from several meters away—unlike barcodes, which need to be in the scanner’s direct line of sight. Multiple RFID tags can also be read simultaneously, meaning that entire pallets of goods can be read at once.
These abilities do much to speed up the inventory-management process. Checking goods into and out of factories, warehouses, stores and other locations can be undertaken rapidly and accurately. RFID technology also means that retailers can easily track product movements, further refining their ability to successfully manage inventories. The security potential of RFID tags is also helpful. Retailers have been using them for years to help prevent the theft of higher-priced items, with readers at store exits triggering alarms.
In broad terms, all of this means that retailers can keep a much closer eye on their inventory while also speeding up the process of doing so. This accurate, real-time inventory management can help prevent overstocking and understocking and enhance the management of products linked to seasonal promotions or with short shelf lives.
Why Is This Important?
The detailed approach enabled by RFID tagging-based inventory management is crucial, especially in the competitive retail market that’s often prone to low-profit margins. That market is growing steadily in the United States, with GlobalData projecting a compound annual growth rate of more than 4 percent in the five years to 2026. In short, retailers that can introduce greater efficiency in their processes have greater scope to improve their bottom line. A better bottom line, naturally, means happier shareholders. But the benefits of RFID don’t stop there.
Better inventory management means customers are more likely to find the goods they need in stock. That serves to grow customer satisfaction rates, so RFID technology can result in happier customers, too. Of course, happier customers also tend to be more loyal, which improves the bottom line.
While the use of RFID tech has become more widespread, many retailers still need help to achieve full clarity when it comes to their supply chain. Indeed, 54 percent of executives report missing a clear view of supply chain data beyond tier 1. This can result in inventory-management issues that lead to in-demand products being out of stock—an irritation that certainly won’t aid customer loyalty. This is a growing problem for online retailers. Adobe reports that between March 2020 and February 2022, consumers who shopped online were faced with 60 billion messages telling them that products were out of stock.
From RFID to IP Lookup
Of course, RFID is one of many tools that can help retailers deliver efficiencies in their inventory-management processes and how they respond to customer demand. SEON explains that an IP lookup tool, for example, can deliver greater insights into customer demand patterns. This depth of understanding means that retailers can adjust their inventory according to their requirements and ultimately enhance their inventory-management strategy.
Retailers are also looking at new ways of using older tools. Wholesale club BJ’s, for example, has given barcode scanning a new life by using Simbe’s robotic system, with computer vision and artificial intelligence helping to drive up efficiency and reduce out-of-stock instances. BJ’s plans to roll out the scanning robots across all 237 of its locations before the end of 2023 (see BJ’s Gains Efficiency from Robotic Inventory Management).
The robotic solution is particularly well suited to the warehouse environment, where the scale of the metal shelving means that goods are often out of the reach of both handheld barcode scanners and some RFID readers. A wide range of other complementary tools and technologies are in use by retailers around the globe who wish to establish slick inventory management processes.
Naturally, retailers will continue to evolve their solutions around changing customer trends and in line with shifts in the application of new technologies. The balance between brick-and-mortar stores and online retail offerings is fine for many brands. Eastern Peak states retail sales will hit $5.5 trillion by 2027, with a 30 percent share of online shopping. Retailers must ensure they meet customers at their point of inspiration—whether online or in-store—with the right products on the shelves to satisfy those shoppers’ needs.
RFID technology has a key role to play in the future. In helping to transform inventory management in the retail industry, both as a standalone tool and when combined with other efficiency-enhancing technologies, it is supporting retailers in both practical and strategic terms. Still, inventory management is certainly not without its challenges. Security concerns, shrinkage, juggling seasonal offers or short expiry dates, and a range of other issues are still present. However, retailers embracing RFID solutions, alongside other aids such as IP lookup tools, are far better placed to address and overcome those issues.
Tamas Kadar, the co-founder of SEON Fraud Fighters, the Hungarian startup that broke funding records, is also the founder of Central Europe’s first crypto exchange. In fact, it was serendipitous events right then that led him to start working on his own fraud-prevention company when he realized what was already on the market didn’t cover his needs. Starting with the bold idea of utilizing digital footprints and social signals to assess customers’ true intentions, SEON promises to democratize the fight against fraud. Today, the company protects 5000-plus brands around the world as an industry-agnostic, fully customizable, yet intuitive end-to-end fraud-prevention solution that’s highly ranked in the industry.