Comment: Making RFID work in real life

Published: 11:39:13 on the 11th May 2017

Author: Brian Kilcourse


Brian Kilcourse, managing partner at RSR Research Brian Kilcourse, managing partner at RSR Research, takes a look at how retailers are finally using RFID, after chairing the RBTE 2017 conference.

Day one of RBTE 2017 featured a panel discussion moderated by Mark Tailford, global sales director for Asreader Global, featuring Richard Jenkins, head of loss prevention & RFID at Marks & Spencer, Rob Mitchell, manager, stock operations at John Lewis, and Martin Speed, loss prevention manager at River Island. The subject was 'making RFID work in real life', but rather than discussing if and how RFID helps in reducing shrink (as one might expect from the job titles of the participants), the retailers focused on the RFID’s ability to help their companies reduce capital investments in inventory by reducing stock levels while at the same time increasing service levels to customers. 

RFID technologies have been quietly making their way into the retail mainstream since the 2005 Walmart 'RFID mandate'. But unlike Walmart’s original requirement to streamline the shipment of goods from manufacturers to retailer DCs with case and pallet tagging, the retailers represented by the panel have used RFID for item-level tagging to improve inventory accuracy in the store.

According to Jenkins, that effort has been so successful that M&S has been able to reduce backroom stock levels by 50% while at the same time reducing out-of-stocks.  “The improved accuracy pays for the investment”, said Jenkins.  John Lewis’ Mitchell agreed, commenting that RFID enables more accurate replenishment that achieves the double benefits of reduced stock levels and increased service levels. 

The numbers are compelling. River Island’s Speed said the company has been able to improve stock ledger accuracy from about 75% to 99%.  Similarly, M&S’s Jenkins said his company has been able to measure a 14% improvement in inventory accuracy.  That level of accuracy delivers three benefits, according to John Lewis' Mitchell: sales lift, stop-loss improvements, and a 30% productivity improvement in store associates’ cycle counting and replenishment activities.  According to Mitchell, the productivity improvements are important because store associates can redirect their efforts on more selling activities that improve customer service. 

Benefits and ‘next steps’

The panelists agreed the improvements in the efficiency of their companies’ capital investments in inventory alone pay for the investment in RFID technology.  But top-line sales improvements are measurable as well; for example, John Lewis  measured improved 'control group' item sales compared to non-RFID store sales. M&S has also benefited from using the information generated by RFID tags to measure the product life cycle for particular items. Not only that, but the information generated by RFID makes it possible for the retailers to accurately measure the effect of various projects on inventory effectiveness. 

While the focus of each of the retailers’ RFID projects has been on the stores, all agreed that the ‘next step’ is to improve inventory visibility throughout the supply chain, starting with the DCs.

But will RFID replace EAS loss prevention tags?  Apparently not; according to M&S’s Jenkins, paper RFID tags are easily destroyed or defeated.  Jenkins also commented on the privacy concerns related to embedded RFID tags (for example, tags sewn into the hems of garments).  The panelists agreed the EAS tags are likely to stay for the foreseeable future for loss prevention.

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