Later this year, Target will begin rolling out a key program that will enhance inventory visibility and accuracy in a way that the chain store giant hopes will “work its magic in the background to provide people with a seamless, stress-free shopping experience,” as the announcement from its corporate blog stated back in May.
From the retailer’s perspective, Electronic Product Code (EPC)-enabled Radio Frequency Identification (RFID) has become the foundational way to help retailers connect inventory to consumer omnichannel requests. With major retailers like Target and Amazon announcing significant investments in RFID technology this year, there are more rollouts anticipated in the next 12-24 months, according to a recent survey of retailers conducted by GS1 U.S.
Today, two-thirds of the top 30 U.S. apparel retailers are implementing some form of item-level RFID, according to Auburn University research. Retailers are maximizing the benefits of item-level RFID to generate new levels of customer satisfaction, leveraging not only greater inventory accuracy, but also the ability to improve POS, decrease out-of-stocks, improve loss detection, boost sales margins and expedite returns.
The case for RFID has been made; now, how does a retailer get started and set up for success? There are two levels of a roll-out that retailers should consider in the early stages of RFID adoption: pilot programs and vendor education.
Pilot Planning, Execution and Assessment
Most retailers start tagging a few inventory categories at a time during pilot programs to test out operations and profitability. This originally began in replenishable apparel categories — denim, socks, intimates, and the like — and developed into a viable solution for fashion retailing, due to RFID’s ability to match specific consumer needs with real-time inventory.
There are three phases of a pilot program that must be considered: planning, execution and evaluation.
Planning Phase: Develop a pilot execution plan, which includes an in-depth understanding of the pilot use case and store environment. The plan should include an analysis of what is expected of the RFID tag in terms of performance, which will be used to select solution providers to fulfill the hardware and software requirements of the deployment.
Earlier this year, GS1 U.S. released a new guideline called the Tagged Item Performance Protocol (TIPP) to help the retail sector consistently define, test and verify the performance level of RFID tags. TIPP provides a standardized system to benchmark the performance of RFID-tagged items in multiple environments. It also allows retailers to set performance levels for specific use-cases, and allows suppliers flexibility in how they meet grade levels from multiple retailers.
In addition to tag selection and the infrastructure that goes with it, it is important to plan out store execution strategies and set KPIs to measure success. Within the pilot plan, retailers should commit themselves to a post-pilot strategy, including expanded roll-out requirements and business process opportunities.
Execution Phase: Typically a pilot will include several test stores and several control stores with the scope being display compliance and overall inventory accuracy. The technical aspects of the execution of RFID pilots should be coordinated and documented with the partnered technology providers. Pilot programs should last between six and twelve months, and store associates should be trained and ready to provide feedback on day-to-day operations.
Evaluation Phase: At the end of the pilot program, conduct a detailed analysis that measures the stores’ pre-pilot states and notes any specific post-pilot opportunities. In the evaluation phase, retailers will determine if the program is successful enough to spur a more widespread business process change throughout the organization.
RFID implementation means more collaboration between retailers and suppliers. Once a retailer has decided to deploy RFID — in pilot or full rollout — it is essential to provide supplier training and education. Retailers often work with third-party RFID experts to provide periodic supplier forums to ensure alignment on the roll-out and its goals. During the roll-out, retailers deploying RFID rely heavily on collective industry best practices and standards in order to make the change as seamless as possible for the customer.
Ultimately, the resurgence of RFID this year confirms that retailers are finding an incomparable real-time window into their inventories, enabling them to evolve with the consumer. Approaching a rollout in a systematic way that suits an organization’s specific needs and objectives can set a company up for a giant leap towards omnichannel success.