The Basics Of The RFID Business Case – RFID Q&A #1

The business case for RFID in retail? Product Availability. In this Q&A, Nick Markwell, Direct of Sales EMEA, answers the most asked questions by fashion retailers about the business case of RFID.


Daphne: Hi, my name is Daphne Brand, and I am a Business Developer and RFID enthusiast at Nedap Retail.

Today, I'm here with Nick Markwell, who will tell us more about the basics of RFID and fashion retail. Nick, can you introduce yourself?

Nick: Yeah, sure, thanks. Hi everybody, my name is Nick Markwell. I'm responsible for the commercial team within the EMEA region for the iD Cloud platform, and our team helps retailers consult and advise on where to start their RFID journey. I've been working in the retail technology space for the last 20 years and at Nedap for the last five years. Great to be here.

Daphne: Thank you for the introduction, Nick. Nice to have you here.

Daphne: To start with the first question: What are the challenges in fashion retail nowadays, and how can RFID help with that?

Nick: I think during the lockdown period, there was a real focus on omnichannel and making sure that the online and offline stock pools merged to become one. That's still the case today. However, some of the impacts of lockdown are still being realized because we have a labor scarcity issue added to that. So, retailers today need to be more efficient in their store operations because they don't have as many store staff as they're used to.

Nick: We have seen that retail sales have been good, mainly driven by increased inflation. The sales have gone up because of that. But I think because of this increase in inflation and the energy crisis, there's been more of a challenge for the consumer's wallet. The consumer typically has less money today than what they previously had. As such, they are making more informed choices or fewer purchases, and RFID can help make store operations more efficient and enable store staff to focus on the right activities.

Nick: It can also help with the fight for the wallet because making sure that the retail store has the right products in the right place at the right time when the consumer comes in to buy it obviously helps increase the opportunity for sales. So, RFID can make store operations more efficient.

Daphne: But what is the exact business case?

Nick: I think the key driver for a business case around RFID starts with inventory accuracy. A retailer typically does a stock audit once a year, maybe in January. Some retailers do it two times a year or even four times a year. But the challenge with stock accuracy is that they are accurate at the start of the year, but then products come in and go from the retail estate on a regular basis.

Nick: A retailer receives shipments that come into the store, makes sales during the day. There may be returned items, exchanges, thefts, or products transferred to other stores, and all this affects inventory accuracy. RFID can address this issue by fixing the accuracy problem through regular inventory audits.

Nick: By having accurate inventory data, the retailer can ensure better product availability. Knowing exactly what products are in the store, in the right sizes and colors, increases the opportunity for the retailer to meet customer demands when they visit the store. This, in turn, has a positive impact on sales.

Nick: Once inventory accuracy and product availability are improved, RFID enables retailers to offer slicker omnichannel services such as ship-from-store on the same day or buy online, pick in-store. RFID can enhance operational efficiency and provide better insights into product availability in stores, allowing for faster and more efficient omnichannel strategies.

Daphne: Thank you for the explanation. If we talk to fashion retailers, I know that we often get the question: "If I want to have an RFID system, where is it exactly placed in my IT landscape?" Can you tell us more about that?

Nick: It's a good question because understanding the role of RFID in the IT landscape can be challenging. Let's simplify it: RFID isn't there to replace any existing systems, such as an RFID system, but to provide more accurate and reliable data to enhance their effectiveness.

RFID acts as an integration layer, providing more accurate and reliable data to enhance the efficiency of existing systems like ERP.

Many retailers have been investing in their tech stack to become more efficient for the future, and RFID data can feed into systems like ERP, order management, and warehouse management. RFID ensures that retailers have visibility of their stock and can leverage their tech stack efficiently.

Daphne: Regarding omnichannel strategies, what exactly can RFID bring to a retailer's approach?

Nick: It's important to note that a retailer can have an omnichannel strategy without RFID. For example, they can offer buy online, pick up in-store. However, RFID brings additional value to these strategies.

By having accurate inventory visibility and knowing exactly what is available in each store, retailers can offer faster omnichannel services. For instance, RFID enables ship-from-store, same-day pickup, or product availability within a few hours. This level of inventory visibility and accuracy allows retailers to deliver fast and efficient omnichannel experiences to customers.

RFID also streamlines operational efficiency by providing insights into the location of products within stores. During busy periods when products move around, RFID technology helps locate items quickly.

Additionally, RFID improves efficiency in handling returns. It enables retailers to process returns faster and get the products back into their store inventory for resale, reducing the time products spend in distribution centers.

In summary, RFID brings advantages to both in-store operations and digital initiatives for fashion retailers.

Daphne: Thank you for sharing your experience and insights on the basics of RFID in fashion retail. We appreciate your time, Nick, and we look forward to future discussions. Bye