RFID Technology in Retail
Retailers are always on the lookout for ways to test and implement technology to operate more efficiently, set themselves apart from the competition and improve the shopping experience.
Radio frequency identification (RFID) isn't a new technology, but retailers are beginning to see how this tech can directly benefit their bottom line in unexpected ways. RFID is a tracking technology that uses small tags or chips to transmit a signal to remote scanners. In 2016, research showed 73% of retailers had implemented or were currently implementing or piloting RFID. That number had nearly doubled from 2014.
So, why exactly is RFID use on the rise? The majority of retailers see the technology as a clear path to more accurate inventory counts, but some innovative retailers are using it in more unique ways for more than simple inventory management.
Not sure how RFID could fit into your business strategy? Here are five innovative examples of how RFID technology can be put to work in retail.
Changing the Way We See Ourselves
Some luxury retailers have embraced digital technology in their stores to engage customers with an interactive experience. In addition to touch-screen directories and custom music, customers step into interactive fitting rooms to try on their merchandise for size.
IFREEQ memory mirrors allows shoppers get a 360-degree view of what they're trying on and can even change the color or pattern of the clothing with a simple gesture. The interactive mirror automatically recognizes products through RFID tags.
If a customer is still on the fence and want to complete the look, shoppers can add virtual accessories without leaving the change room. If you need a second opinion, the mirror records an eight-second, password-protected video to share with your friends or family.
At the beauty counter, smart mirrors give shoppers personalized makeup tutorials guided by a makeup artist's voice. They can recreate looks step-by-step and get more details on the products they used for purchase.
This incredible interactivity not only helps luxury retailers meld the online and in-person experience, but these offerings also provide a level of personalization that can build loyalty and keep customers coming back for more.
To Make us Feel Like We're Stealing
More and more retailers are looking for ways to disrupt one of the least loved components of the shopping experience — going through the checkout counter. Keeping queues under control is a common retail struggle, and it's no surprise that studies show that long lines hurt sales.
Because the checkout experience is a major friction point for retailers and shoppers alike, some experts are predicting stores of the future won't have a checkout at all, and the metric for success is that customers should “feel like [they're] stealing.”
That's why much of the retail industry was abuzz recently with the opening of the first Amazon Go store, which enabled customers to grab items off the shelves and simply leave. The store automatically charges the items to each shopper's Amazon account, and sends them a digital receipt for their purchase.
And when this beta store in Seattle last year, the tech community and consumers alike started taking guesses at what technology let them walk out of stores without making the obligatory stop to pay at the checkout counter.
While most assumed RFID technology was the culprit, the online retailer was quick to deny it. Instead, it was revealed that they used sensor fusion which is a combination of technologies including cameras, RFID, and sensors to make it happen.
This use case marks an important turning point for RFID technology. More retailers are looking for ways to improve the checkout experience and exercise more control over the shopping experience.
Taking Stock of the Customer Experience
Retailers are investing millions into integrated RFID solutions that minimize out-of-stock situations, provide real-time merchandise location data, and improve the customer experience. The technology allows them to track their inventory throughout the retail supply chain, from the warehouse shelves all the way to the sales floor.
This is especially relevant for retailers with a robust omni-channel strategy, like Macy's and lululemon. Traditionally, inventory counts were a tedious exercise done manually about once a year, but RFID technology enables retailers to monitor stock monthly bringing inventory accuracy from around 60% to over 90%.
Macy's reported that it experienced 2-3% inventory inaccuracy per month — that's 24% annually — making their goal of giving customers the freedom to shop when and where they want difficult to meet. Over the last few years, the retailer rolled out a P2LU (pick-to-the-last-unit) omni-channel fulfillment program focused on enabling staff and shoppers to find every piece of merchandise in stock online or in-store, right down to the last item available.
lululemon's investment in RFID technology revolves around the customer (or as they refer to them, "guests") experience. Before this technology, the retailer realized that merchandise was left sitting in the warehouse instead of on the sales floor. But the company's inventory accuracy improved to 98% as a result of the RFID implementation. And employees are now equipped with handheld devices and an app that allows them to check inventory without having to leave the customer's side.
TShamelessly Tug at Our Heartstrings
In 2016, an organization for stray dogs and cats in the U.K. called Battersea Dogs and Cats, launched a campaign called #LookingForYou.
Over the course of two weeks, representatives from the animal shelter handed out brochures to potential pet parents in a London mall. Unbeknownst to passersby, the brochures were tagged with RFID chips. As they carried on with their day, seven closely located digital billboard were activated as they passed, showing video images of an adorable dog that seemed to be following them home. If the person approached the screen, the dog moved toward them as well.
The campaign increased website visits by more than 33%. Almost all (79%) of those that clicked through from the campaign microsite were new to Battersea, and there were 10 times more leads than the shelter actually had dogs.
To Keep Customers Coming Back
This year, luxury fashion retailer Rebecca Minkoff launched a collection of 10 limited-edition smart handbags in time for spring. Each "connected" bag comes equipped with a RFID-enabled handtag that qualifies the owner for the company's loyalty program and unlocks exclusive perks like private styling sessions, style recommendations, video content, and an invitation to the brand's next fashion show.
Given that a handbag naturally travels with its owner, the company hopes to expand on the rewards it offers customers to third parties as an incentive to to wear it out more and inevitably drive brand loyalty.
Rebecca Minkoff is no stranger to innovation. Their brick-and-mortar locations are infused with technology, including digital concierge walls to seek help (or a drink), interactive mirrors in the fitting room, and self-checkout. And similar to the Amazon Go model, the retailer also used RFID chips and iPads to give their shoppers a seamless checkout experience.