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Is RFID a job killer?

This article is written by Carl Michener, who introduces the equation of RFID and job creation, and if RFID has stolen jobs. The answer is: nope. It's still the same pie, but sliced differently. Rather than cutting jobs, retailers reallocate staff.

Back in 2010 the Editor of RFID Journal, Mark Roberti, authored an article entitled RFID's Impact on Employment. He wrote that "when you consider the history of the past 200 years, what you see is massive improvements in economic efficiencies in the developed world, and massive job creation."

Roberti was arguing that technological advances lead to job gains rather than job losses and that RFID implementation from factory to sales floor would be no different. Four years ago there were many differing opinions on the matter, but RFID was much less tested then than it is now. It's time to check in with industry leaders and see if Roberti's hypothesis holds true.

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The first opinion leader with whom we spoke was Pekka Riippi, CEO at Nordic ID, a Finnish developer of barcode and RFID readers. He likens what we are seeing today with RFID in retail to the advent of the personal computer. "Before the PC, so many functions in a business were much more laborious: keeping track of finances, designing promotional materials, even generating an invoice. But the wholesale adoption of the PC did not result in widespread layoffs. People were simply reallocated to higher value tasks."

John-Pierre Kamel and Marshall Kay, principals at RFID Sherpas based in Evanston, Illinois, tend to agree. They are involved on a daily basis in planning and executing RFID deployments in the retail sector. "In almost all the projects we are involved in where we build the business case, there is repurposing but no layoffs," notes Kamel. "Even if counts become more efficient, managers are going to reinvest that time back into doing them more often."

Bill Hardgrave, a professor at Auburn University, sees things the same way but believes that it's too early to say for sure with RFID in retail. "We haven't yet seen studies analyzing the impacts on the labour side," he observes. "But anecdotally, we're seeing employee redeployment to a value-added activity."

Hardgrave has found that using a mobile RFID reader reduces inventory count times by an average of 96%. By itself, counting inventory is not going to increase sales; it's one of those things that you just need to do in order to know what you have and what you're missing. Speed that process up and you can have employees spend more time catering to customers' needs. But Hardgrave has found that's not what happens. Timewise, the number of hours invested in counts does not change much. "Retailers end up doing those counts once a week rather than once every six months," he explains. "The uptick in sales created by inventory accuracy is so great that the cost of the labour involved is all but irrelevant."

In certain situations count times are not reduced with RFID, but the quality of the count is improved. Instead of counting the total number of boxes in the back room, with RFID you can spend the exact same amount of time doing a serial count. Rather than simply knowing how much inventory you have, you end up with definitive knowledge of what your store is missing.

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RFID a factor in employee satisfaction

Far from being a job killer, Kamel and Kay have found that implementing RFID improves employee satisfaction and reduces employee turnover. "RFID makes retail jobs easier to perform and less mundane," explains Kay. "And when you can say without hesitation that the SKU a customer is looking for is in stock and where it's located, the customer is happy, you're happy, and your job satisfaction rises." Employees who like their jobs better stay longer, which means less hiring, less training… More knowledge, better service and higher earnings. It's a simple equation.

And it's not just customer-facing tasks that employees more satisfying. "It's about giving them tools that are relevant to all of the work that they do, not simply when they are customer-facing," says Kamel. Replenishing shelves on the sales floor used to be tedious, painstaking and error-prone. With RFID it's far less demanding. Instead of guessing at what needs to be replenished, staff can concentrate on customers or spend time keeping merchandise presentable. 

Better online capability

Another thing that RFID affects is the relationship between Web sales, staffing and cost savings. You don't need RFID to fulfil Web sales in a Distribution Centre or in-store, but it does deliver the inventory accuracy required to eliminate buffer stock, which can amount to hundreds of thousands or millions of dollars in excess inventory. It also tends to increase staffing.

Many smaller retail chains that fulfil online orders directly from the store need more staff. A simple rule of thumb accounts for this - the sales-to-staffing ratio. It's best explained with an example: customers are very well attended to in Saks stores, but not so well at discount retailers because employee allocation is predicated on the value of sales. On that premise, retailers tend to increase the number of staff on the floor at a store with a lucrative online sales channel that the store fulfils. How stores and head office share credit for online order fulfilment is another matter.

The one thing that we know for sure is that allocation of sales staff will be different for each retailer. A large department store that has not implemented RFID will contract an outside firm to count inventory storewide once or twice a year, at considerable cost. But that cost is still less than that of implementing RFID, or of hiring extra employees to perform regular counts.

Of the retailers that have cut staffing to the bone over the past five to ten years, many have reached minimum numbers - they have to have at least one or two people on the sales floor. Implementing RFID would not change that; it would simply increase the time they spend with customers.

Other retailers find value in well-staffed stores regardless of their technological sophistication. Walk into an Apple store, where dozens of items costing hundreds or thousands of dollars are sold every hour, and there are scores of sales associates - despite the fact that ubiquitous mobile POS (mPOS) payment, Near Field Communication (NFC) payment (courtesy of Apple Pay) and other technologies are used to great effect. It appears that retail-focused technology has not changed the sales-to-staffing ratio very much at all - there's just more money being made where it has been implemented.

Kay _Hargrave _Riippi

John-Pierre Kamel (picture missing) and Marshall Kay (left) are Principals at RFID Sherpas LLC, a North American consulting practice focused exclusively on the retail sector.

Middle: Professor Bill Hardgrave is Dean of Business at Auburn University in Alabama. He is a prominent, published expert on RFID who often speaks on the subject.

Right: Pekka Riippi is CEO of Nordic ID, a leading manufacturer of handheld computers for fashion and specialty retailers, based in Salo, Finland's Silicon Valley.

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