Retail, RFID And Real-Time Sales

Probably every shopper knows the thrill of the retail treasure hunt — that odd, unexpected, but perfect product discovered on a shelf; that highly desired item almost hidden in some corner, but found via serendipity or determined effort. Probably every shopper also knows the frustration of the hunt — the time-consuming, wasted effort to locate a shirt or skirt in a specific color or size; an item that’s supposed to be on the retail floor, according to inventory software, but is nowhere to be found.

This story is not an obituary for the retail treasure hunt inside brick-and-mortar stores (far too soon for that), but rather a head’s up about how radio-frequency identification (RFID) technology could one day provide enough efficiency and digital knowledge for shopping to make those hunts seem like a relic of the past.

In a new PYMNTS interview, Spencer Hewett, CEO of RADAR, which sells inventory management technology based on RFID, spoke with Karen Webster about how those tools could significantly change the in-person store experience. RADAR has just started its work, kicking things off with three vertically integrated U.S. apparel retailers — with data and lessons about its fledging effort a ways off. Yet, Hewett offered a vision in which these initial RFID inventory moves could clear a path toward more autonomous checkout for retail.

Long Lines

The story starts in a long line inside a retail store — specifically, one that Hewett found himself “stuck in” during one of his college summers as he was studying electrical engineering and computer science. “I bet my friend I could figure out a way to eliminate lines,” he told Webster. In fact, by his telling, he became “obsessed” with the general concept of making those lines extinct — ideas that included accurate, real-time tracking of store inventory and automatic, cashierless checkout.

He soon realized that line elimination was “a far more challenging problem than I thought it would be,” but he didn’t turn his back on the issues associated with that goal. Hewett threw himself into RFID research, and came up with an idea for innovation that started relatively small, at the store inventory management level. Granted, RFID wasn’t exactly a new technology. In addition, so-called smart tags were already a well-known concept. However, RFID chips and sensors had progressed significantly, increasing the technology’s accuracy and potential for more retail use.

The payoff was pretty clear, too.

“If you can simply track every single product in a store,” he said, “the sales funnel becomes a lot less leaky, and you see a significant increase in sales.” That can be especially true for brick-and-mortar apparel retailers, where sales associates are engaged in what amounts to a never-ending battle against the tide. In this case, that means locating misplaced items on the sales floor and in fitting rooms, and returning them to their proper places so interested consumers can buy them, instead of waste time looking for them.

To demonstrate that point, and further explain why RADAR is targeting apparel retailers for the initial deployment of this RFID technology, Hewett gave an example of one apparel store where 25 percent of the items were missing from the sales floor. Sure, some shoppers really do like the treasure hunt, but most of them have limited patience. If a consumer cannot find the desired item, he said, “55 percent of them will leave and not ask employees for help.”

RFID Process

So, how exactly does all this work?

RADAR installs RFID sensors on a store’s ceiling, with the work being done overnight, Hewett said. Each sensor has a 360-degree view, and covers about 500 square feet of retail space. Those sensors pick up RFID signals from each product, with information relayed back to sales associates via a mobile app provided by RADAR. Those signals produce real-time location data — they can tell when a product is on the move (say, from a rack to the fitting room), and if a product isn’t where it’s supposed to be, enabling quick action from store employees, and lessening the risk of frustrated shoppers and lost sales.

The overall point, he said, is for the retailer “to run a tight supply chain,” one that eliminates the gaps in the order replenishment process.

However, as Hewett said during the PYMNTS interview, the RFID technology can do much more than inventory management and bring efficiency to supply chains. It can offer web-like analytics to operators of brick-and-mortar stores. The real-time data can provide insights into what products shoppers are picking up (akin to browsing), but not buying, and what clothes are making it into the fitting rooms, along with other knowledge. The technology “begins to measure the physical store in the same way you measure the online store,” he said.

Path To Innovation

Furthermore, the RFID technology could enable autonomous checkout — that is, where sensors determine what products consumers are walking out of the store with, as well as charge and record other data accordingly. It can even do so in a way that Amazon is not yet doing. The eCommerce operator uses cameras and product-weighing technology for its cashierless checkout, he noted, and that’s not suitable for all retail sectors, including apparel. That’s because cameras have a hard time distinguishing among clothing sizes, along with other issues.

Not only that, but RFID promises far more accuracy than other technologies when it comes to autonomous checkout. “You need to be 99 percent accurate or greater” to succeed with such checkout, he said, highlighting one of the main challenges. “If Amazon loses money [from less accuracy], it’s inconsequential, but, with other retailers, the margins are very thin.”

Let’s not get too far ahead of the game just yet, though.

For instance, Webster pointed out, autonomous checkout is not just about technology, but culture: For many shoppers, treasure hunters or not, it will take time to get used to the idea of walking out of a store with products in their hands (or new clothes on their backs) without going through a manned checkout station. Yet, RFID could help set the stage for some of those future innovations, assuming the technology proves its worth first in those brick-and-mortar apparel stores.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.