INDUSTRY NEWS

Retail RFID: When and How, not Why or If

RFID Journal Live’s 10th anniversary conference and exhibition was held in early April. I’ve attended them all and have seen the cycle of interest and enthusiasm rise and fall multiple times. This year, the industry seems to be enjoying a groundswell of growth led by the publicity behind a growing number of successful long-running pilot programs, especially in the retail apparel market segment.

The highlight of the conference was the all-day session featuring speakers covering all aspects of the retail applications, along with the Retail and Apparel Pavilion in the exhibit hall, where several vendors showcased hardware and software products devoted to inventory control and security products.

Seven Years of Efforts

The primary message from the retail practitioners, academic researchers, and technology providers who addressed the gathering is that RFID works…by any definition of the word. The seven years of effort in standards development are now paying off. ■ Hardware design, durability, functionality, and accuracy are measurably improved because they have evolved around the standards set by GS1 and EPC Global. ■ Read rates are significantly higher—up to 30 to 40 thousand per hour. ■ Tag detection performance is significantly better, thanks to strides made by reader manufacturers and inlay antenna designers. ■ RFID tag demand is high enough so that prices have dropped somewhat. ■ Application software is abundant and robust. ■ Implementation processes have been honed.

Best of all, the retail pioneers, such as Bloomingdale’s, Dillard’s, Walmart, jcpenney, American Apparel, and the Metro Group in Europe, have achieved their initial goals of getting better visibility to merchandise inventory, streamlining the item-level stock count process, and obtaining a significant return on the investment.

Following are some of the major takeaways from the retail sessions.

Deployment Rules

Dr. Bill Hardgrave, now dean and Wells Fargo professor at Auburn University’s College of Business, spoke passionately about his “Big 4” RFID applications for retail, and provided a list of ten deployment rules to live by. “Nothing else matters if inventory accuracy is poor,” he said. “First and foremost, get that right.” Subordinate to inventory accuracy are identifying and reducing out-of-stocks, loss prevention, and locating merchandise.

Beyond those four applications, he mentioned dressing room controls and price-change management as future places where RFID will ultimately be of value. A few of the more significant deployment rules are listed here: ■ Pick your use case first. What is important to your organization? The use case should drive the technology choice, not vice versa. ■ Don’t try to answer the question, “Does the technology work?”

It works according to Dr. Hardgrave. Of course, there are varying definitions in this case for the word “works.” Don’t get hung up on technological definitions. Focus more upon whether or not the system works by meeting your goals, including obtaining an ROI. ■ There are two prominent pilot strategies—isolating merchandise categories or isolating stores. Pick one or the other, depending on your company’s strengths. ■ Run the pilot by collecting baseline data (say for two months), assess the impact (two months), and collect similar data in control stores.

This methodology will allow you to compare before and after, as well as user against non-user. Make sure your sampling is statistically significant, so that the data is strong enough to allow for the conclusion to be advanced over a wider sample (rollout).

DiLonardo is a well-known authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (www.retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement. DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.

Insight from Bloomingdale’s

Roger Blazek, vice president of shortage control for Bloomingdale’s and its Omni Channel business, is an early adopter of item-level RFID. The Bloomingdale’s case study has been used to champion the technology in the retail industry. He provided an interesting insight into the experience at Bloomingdale’s, as well as a couple of thoughts for the future of RFID as a shortage-control tool: ■ Do frequent inventory item file updates reduce inventory distortion?

The main goals for the pilot were to improve the accuracy of the on-hand inventory, planning and inventory management, and store execution; that is, getting the right product into the hands of the customer and thereby improving financial results. The pilot was so successful that more cycle counts became so important to the business, “The stores wouldn’t let us take it out,” he said. ■ Is there any correlation between RFID counts and shortage rates?

Since RFID is not being used directly as a theft-prevention method, there doesn’t seem to be a direct correlation to shortage results.

An integration of RFID and EAS is not a main focus, but is under discussion. With additional software controls in the handheld readers, Blazek can envision a day when the RFID counts could displace the current methodology for conducting the fiscal year-end physical inventory. ■ Enterprise-wide rollout. Macy’s, the corporate parent of

Bloomingdale’s, has recently announced an enterprise-wide rollout