RFID is becoming one of the hottest buzzwords in the retail industry. It has been used by many industries for everyday tracking. Now since the price of RFID tags has dropped significantly in recent years, it can be applied on every item so that retailers can track its stock from manufacturing all the way to the point of sale.
Brick and mortar retailers aiming to stay ahead of the game in omni-channel retailing have been seeking to deploy the technology throughout their operations to increase sales, reduce out-of-stocks, reduce working capital, as well as enhance loss prevention efforts and consumer experience.
Retail in Asia sat down with five retail experts in a round table discussion to talk about how RFID is used in the retail industry, the benefits of approaching omni-channel retailing with the technology as well as some hot issues facing the retail industry.
Moderator: Tony Smyth, Managing Editor, Retail in Asia
Yoko Wang (YW), Editor, Retail in Asia
Panellists:
Left column, front to back
- Yoko Wang (YW), Editor, Retail in Asia
- Eliza Lau (EL), VP Hong Kong Market, CitySuper
- Tony Smyth (TS), Managing Editor, Retail in Asia
- Peter Hurst (PH), Group Director at inProjects Ltd/ Partner of EC Harris
Right column, front to back
- Jasper Chung (JC), Regional Strategic Development Manager Asia-Pacific, Fossil
- Christophe Castagne (CC), VP Merchandise Visibility, Asia, Checkpoint Shanghai
- Ken Ng (KN), Managing Director, Checkpoint Shanghai
- Philip Woolf, Operations Consultant to Mr Sims
Sponsor: Checkpoint Systems
Photographer: Jean Leslie
Venue: Gateway Hotel Hong Kong
Date: 23 July 2015
TS: Is shrink a growing challenge facing Asian retailers?
EL: Yes, as for our group – City Super Group, there are three core components which include the high-end supermarket chain city’super, lifestyle store Log-on and lifestyle casual dining court cookedDeli. We normally benchmark the shrink rate with the FMCG sector. And we have found out that the maturity of the operation will affect the shrink rate. When the business just starts, the shrink rate tends to be high, but as the operation gets more mature, the shrink rate will get close to the benchmark. For grocery retailers, the shrink rate is normally around 1 percent.
We have been using both of human monitoring and loss prevention technology in our stores to deter theft. But even so, we still catch shoplifters every day.
TS: How would retailers decide which merchandise should be protected? What are the high-risk merchandise in the store?
EL: For retailers who have a wide price range of products like us, we normally work with the solution provider in order to pick a solution that suits our needs. We would pay special attention to products with high value as well as hot items which may not be expensive but easy to be stolen. We’ve got to learn what the hot items are based on the shoplifting cases reported by the security guards every day. In fact, there’s one thing that has been stolen constantly which we find very surprising – shopping trolleys. That’s one of the challenges we are facing now.
KN: We do have a technology which can track the trolleys and prevent them from being taken beyond the supermarket’s perimeter. Once a trolley is wheeled out of the store’s periphery, the wheels will lock up and the only way to unlock them is by moving back to within the perimeter area.
PH: How is RFID technology used in the retail industry?
KN: RFID can be used in the supply chain operations of retailers to ensure better traceability and improve inventory management. Since every item can be identified by its unique identifier now, the technology is also used in loss prevention and merchandise availability.
RFID technology can be used to collect data and understand the shopping behaviour of customers. For example, when a new line is launched, if the retailer gets 20 jeans but one sale, he will know there’s something wrong with the design. With the data collected from the fitting room, the fashion chain can react to customers’ shopping behaviour very fast.
RFID can also be used to interact with customers. When a customer is trying on a product in the fitting room, she can easily communicate with the sales associate through the tough screen about what size or product she’d like to try on if the current one doesn’t fit.
Grocery retailers can use RFID to monitor the shelf life of products, especially the fresh food. With this technology, retailers can keep track of every single product with a label. Once a product is reaching its expiration date, the system will send out an alert. With a reader, the sales staff can easily locate the specific item, put it on promotion or take it out from the shelf.
YW: Aside from shoplifting, employee theft is also one of the main causes of retail shrinkage. It was reported in June that Apple CEO Tim Cook received complaints from retail staff about the company’s policy of checking retail employees’ bags as a security precaution which was considered embarrassing and demeaning. Are there less privacy-intrusive ways to prevent employee theft?
CC: Yes, there are. We have been working with several luxury retailers and have found out that over 70 percent of shrinkage is caused by employee theft. We’ve created a solution to track the movements and locations of merchandise in stores – S3i. It’s customised to provide real-time notifications when merchandise enters or exits designated zones or when there is an attempted unauthorised removal of the device. With the technology, retailers are able to detect and deter shoplifting, organised retail crime and employee pilfering.
S3i offers retailer’s corporate management, store operations and loss prevention critical data on inventory quantity, location and movement of their high-value items within the store. For example, a store manager can have immediate visibility to all of the store’s high-value merchandise protected with S3i devices. When a shopper inquires about a specific item, the store associate can quickly locate it following the graphical user interface.
Any shoplifting attempt to remove the S3i device creates an immediate alert that enables store personnel to address according to store policies. In addition, any removal of the S3i device with an authorized key is logged and can help reduce incidents of internal theft.
TS: Last week, a sex video shot in the fitting room of a Uniqlo store in Beijing’s Sanlitun was leaked online and went viral on social media. The incident put Uniqlo in a position of having to defend itself from accusation that it’s a marketing stunt. Is there any retail technology which will prevent retailers like Uniqlo from getting involved in a scandal like this?
KN: We have a solution which can track how much merchandises a customer brings to the fitting room. Sometimes, the customers leave the products in the fitting room after they try them on. If the products are not put back on the shelf soon, the retailer will miss a lot of sales opportunities. With an RFID reader in the fitting room, the retailer is not only able to put the products back on the shelf soon but also understand the shopping behaviour of the customer.
After the Uniqlo incident, we can add a new feature to the solution which allows the system to track how long a product is kept in the fitting room. The retailer can set a time limit in the system, say 10 minutes. Once a product is kept in the fitting room for 10 minutes, the system will send an alert and the sales staff can go to check with the customer.
JC: How would RFID technology benefit retailers in the age of omni-channel retailing?
CC: RFID is essential for successful omni-channel retailing effort. It plays a key role in retailers knowing what they have and where inventory is at any given time. Using RFID, retailers know when stock comes into stores and when it is on shelves for purchase. For catalogue, phone and online orders, RFID can enable more "complete order fulfilments" and shipping from the closest store both to reduce the time and costs associated with shipping.
Beyond this there are several other side benefits that have a tremendous impact on costs and sales. Finding more of what they want from retailers and receiving it faster boosts customer satisfaction and loyalty. This can result in both increased sales and reduced inventory costs.
Knowing what you have and where you have it also enables retailers to better understand customer preferences, like where they prefer to shop and how they shop. This enables them to better optimise inventory by store location and region. All of this adds up to reduced capital costs, by reducing the capital tied up in inventory, and increased sales.