Even as e-commerce continues to grow by leaps and bounds, the reality is that it represents a small percentage of retail transactions. People still want to shop in store. What they don’t want are the hassles that come along with it. That’s why retailers are trying to figure out how to integrate into their physical locations some of the ease that online shopping provides. And today, many of those solutions are powered by RFID.
While RFID isn’t new, the emergence of omnichannel shopping has given it new importance, as goods are pinging back and forth between distribution centers, stores, factories and consumers.
“Omnichannel is a key driver. When a brand doesn’t know what they have, and where it is and how fast they can make it available, they may promise something to the consumer and the consumer is disappointed. Or retailers have to have buffer stock, putting margins in jeopardy,” Uwe Hennig, director market development EMEA for Avery Dennison, said. “RFID brings item-level, almost real-time visibility to all locations.”
Beyond simply taking stock of inventory levels, which had been the primary function for RFID, retailers can now use it to transform the whole shopping experience and free up sales people for consumer-facing services.
“What we see is that when retailers offer shoppers the ability to reserve an item in their size and their color, and when the service really works, consumers love it. Or in the past if a consumer bought something online they could only return it online but with RFID and omnichannel, you can return an e-commerce item in the store. It’s a huge opportunity for the brand to speak to the consumer about other products to turn this lost sale into a sale,” Hennig said.
“It’s not a trend. This is how consumers want to shop and this will not disappear,” Hennig added. “They will just raise the bar, and for brands and retailers that can’t offer this service to the consumer, [and] it’s super easy to take them off the list. And consumers do this.”
In May, an RFID study from Accenture illustrated the difference in capabilities between stores that use it and those that don’t. It found that 83 percent of retailers that have adopted the technology offer three fulfillment options while only 24 percent of retailers without the capability offer a similar number of options.
These days, how consumers want to shop is often dictated by one major player. Amazon, with its fast, free shipping, has conditioned shoppers to expect near instantaneous fulfillment. According to a recent report from DXC Technology and IDC, 35 percent of Gen Xers and 28 percent of millennials opt for quick-shop options. And as a result, other retailers are on the hunt for solutions that can allow them to keep pace. One of those is RFID, according the Hennig. Thanks to the inventory accuracy the technology provides, retailers have more fulfillment options, which translates into speedier service.
Another way that RFID can enable retailers to mimic Amazon is through checkout. When it launched in 2016, Amazon Go was a wonder. The convenience store that allows consumers to browse, shop and leave without getting held up in a checkout queue made news and spawned a slew of retail tech companies promising to deliver a similar experience for other retailers.
The problem though is that unlike bottles of soda or bags of chips, clothing items often has security tags that must be removed by a store employee. This hampers the whole grab-and-go idea. With RFID, Hennig said, consumers can pay with their mobile device and leave the store because the technology is also the security feature, which is disarmed when the system recognizes that the item has been paid for so no alarms will be triggered.
At an EU retailer, shoppers are in fact leaving without paying for their items. But it’s all by design. The company offers a try-before-you-buy service for any shopper with a store loyalty account. The service has since expanded chain wide because consumers like scanning the products with their phones, walking out and trying them at home before committing to the sale. If they ultimately decide the garment isn’t for them, they simply need to return them within the trial window and they won’t be charged.
While the service is of benefit to consumers, Hennig said there’s a secondary boom for the retailer as well. “They have more people using the loyalty card and that’s a good vehicle for their marketing department to send vouchers and campaigns,” he said.
In the end, Hennig said, RFID allows retailers to boost all areas of business, including customer experience, supply chain efficiency and speed to market.