Until now, small retailers have had a tough time selling online: when you’re too small to have a dedicated DC, you have to fill orders from stores. This article by Carl Michener describes how small retailers turn to RFID for Web shop capability.
Author: Carl Michener
Small retail chains turn to RFID, boosting
inventory accuracy from 70% to 90%
RFID is not just the darling of big retailers. Growth in RFID
for retail is not just coming from the American Apparels and the
Gerry Webers of the world-single stores and small chains are now
finding great value in RFID solutions as well.
RFID Journal reports that
small stores in Norway are jumping on the bandwagon, with 40+
retailers implementing low cost RFID systems since 2012. Front
Systems, the systems integrator responsible for the implementation,
promotes Nordic ID Morphic UHF RFID Cross Dipole handheld readers
as the tool of choice for inventory counts and locating items
around the store. For reading at POS and orders entering the
storeroom, they favour Nordic ID Sampo S1 fixed RFID readers.
Initial findings have shown a rise in inventory accuracy among
Front Systems customers from about 70% to 99%. Of the many
functions that their new RFID systems fulfil, retailers place the
greatest value on the ability to quickly perform a store-wide
inventory count to help keep all goods for sale, in all sizes, on
Move to online retail driving RFID
Hielke van Oostrum, Sales Director at Nordic ID, finds that the
story is much the same in the Benelux countries: bigger retailers
are generally reluctant to implement a new solution, while the
smaller ones are adopting.
"In these uncertain economic times, it's the smaller chains that
are moving forward," says van Oostrum. "In particular, it's those
that want to move into online retail." van Oostrum has found that
forward-thinking retailers are shoring up sales by challenging
major online retailers head-to-head with a web presence of their
own. He has further pinpointed the demographic: "It's the
family-owned stores that are more likely to be influenced by an ROI
proposition," he concludes. "It's logical, since they have an
equity stake in the business and stand to gain the most."
Online is a fantastic sales channel with potential global reach,
but it's not without logistical challenges. Chief of these is
inventory-related. With no distribution centre, smaller stores have
no choice but to fulfil from shop inventory.
"For online retail to work, each store must know exactly what is
in the shop at any given time," observes van Oostrum. "None of
these retailers have the manpower to do a manual stock take every
second day." The only practical way to obtain the inventory
confidence required for in-store online order fulfilment is with
RFID. At 15 to 25 minutes per location, a complete inventory count
can easily be performed at the end of each day.
Costs no longer a barrier
Big shops can afford big, expensive systems. Smaller retailers
need to keep costs low, but with the RFID systems of today that's
entirely possible. Many systems integrators provide the complete
package, including a cloud-based inventory system that's
affordable, scalable and breaks down inventory by store.
Ulbe Keegstra, Managing Partner at Trackwise (a part of
EasyLogic) based in Moordrecht, Netherlands, is finding that cost
is not as much of a barrier as it once was. "An RFID system will
pay for itself by reducing instances of in-store stock-outs in
about 12 months," he says. "We have found that RFID systems also
reduce shrinkage losses from 4% or 5% to less than 1%."
Keegstra's figures assume that storeowners opt for disposable
RFID tags that are attached when goods are received in-store. When
reusable tags are selected, the payback is half again as long-16
to18 months-but after that initial period, ongoing costs remain
lower. Tags are in fact the most expensive part of a modern RFID
How small retail RFID works
The way that small retail RFID setups work is really simple.
Handheld RFID readers connect with a fully cloud-based RFID
database over the Internet via a 3G SIM card or, more often, WiFi.
Tags are paired with SKUs in the back room when items enter the
shop, entering RFID and POS systems simultaneously. Changes to the
RFID database are reflected in the POS system so that employees can
see when an item is sold in real time. At point of sale, tags are
detached and either thrown away in the case of disposable tags or
put aside in the case of reusable ones.
"The modern RFID system has become an elegant machine that
doesn't entail major infrastructure investments," says Keegstra.
One thing that the integrator has noted recently is the rising
popularity of dual-function tags combining UHF RFID reading and
anti-theft. "It was one of the most notable trends at the
EuroShop show this spring in Düsseldorf," he notes. "Mount a
discreet RFID reader at the entrance, and it will create an alert
if a tagged item leaves your store."
If there's a lesson here, it's this: technology always gets
better and less expensive. When it reaches a certain point, it is
within everyone's financial means. The democratisation of RFID is
happening right now in retail. Watch out, big retailers! With RFID
system costs at an all time low, smaller retailers can acquire the
same sophistication and meet you on your own terms.