Retail Inventory Management with RFID

Why should using RFID be a best practice for Retail Inventory Management?

Retail inventory management is prone to numerous problems that all tie back to a lack of inventory visibility. Using RFID in inventory management is quickly gaining popularity due to complexities from the sheer amount of inventory items, the fast-paced turnover rate, and the ever growing retail shrinkage rate, which was about 1.33% of sales in 2019. In addition, the current methods of inventory management all depend on the manual counting process or manually scanning each barcode, which both take a significant amount of time and are not always accurate.

Using an RFID handheld reader to take inventory of a retail sales floor can reduce inventory time from multiple hours to only a few minutes. An RFID reader’s ability to read thousands of tags per second saves employee’s time that can be better spent assisting customers. Because inventory counts are reduced to minutes, inventory can be taken daily or twice daily, providing more data and insight into the sales floor and product demand.

By tagging each item with RFID tags, a retailer can create individual item visibility instead of relying on vague, fluctuating group counts. Now, not only is each individual item uniquely identifiable, but inventory count time has been dramatically reduced, allowing a store to increase inventory counts.

Retailers using RFID for Inventory Mangement

H & M

Victoria's Secret

Target

Lululemon

Macy's

Nike

What is Inventory Visibility and Why is it so Important in Retail?

Item-level product visibility provides:

99.9% Inventory Accuracy
Identify Product Demand
Visibility into Inventory Shrinkage
Visibility into Popular Items & Product Trends
Reduce Out-of-Stocks online & in-store
Reduce online cancellations due to incorrect inventory information

What Makes Up a Retail Inventory Solution?

RFID inventory management systems can be created differently depending on a company’s needs. A basic system could simply consist of RFID tags and a mobile handheld RFID reader. The handheld reader can scan inventory items in and out of stock and be used to take inventory multiple times per day, both in the front and back of the store.

If a fixed RFID system is used, it will require even less manual processes than a handheld RFID reader system. Fixed portals, gateways, or overhead systems could be installed in the front and/or back of the store and set up to take inventory on a schedule.

The best ways to create an RFID retail inventory management system is to create it for a company’s unique space and requirements. A retail location consisting of 1000 sq ft cannot be set up the same way as a 6000 sq ft retail space. Most retail companies choose to use a combination of a fixed and handheld reader system to reduce manual processes and enable additional RFID applications like inventory picking, shipment/order verification, and the flexibility to search for lost items.

In addition, with specific hardware setups, RFID can provide even more features depending on the retailer’s needs, one such setup is a smart shelving unit. Custom software can be programmed to send an alert when an item is removed, returned to a shelf, or after a product has not been read for a certain amount of time. Features like these enable retailers to set specific parameters on certain shelfs or items, which can be ideal for preventing theft of higher value products.

How to choose an RFID Tag for Retail Inventory Management

As with any application, choosing the right RFID tag is critical to an application’s success. Below are some of the most important things to consider while choosing an RFID tag for a retail environment.

Form Factor - Wet inlays, labels, and hang tags are the most commonly used form factors for a retail inventory application.

Mounting Surface - Most retail inventory applications do not involve metal items, but some specific use cases can, like jewelry tracking. Make sure to use a metal-mount tag for tagging metal or metallic products.

Size - Tag size can be important when tagging small retail products like jewelry or hair accessories. For these items, try to find a small tag so that the product isn’t completely obscured by the RFID tag.

Attachment Method - Inventory applications typically use RFID tags that are easily removed after purchase, which narrows down the tag attachment method options. Adhesive, string or plastic tag fasteners, or sewing are the most common tag attachment methods used for easy removal.

Read Range - Read range requirements vary depending on the specified hardware setup, but generally the desired range is between 3 and 10 feet.

What Does a Successful Retail Inventory Management System Look Like?

A successful retail inventory management system provides you with a clear, accurate picture of your inventory at all times. It provides item-level visibility and keeps historical records thus enabling a chain of custody on each individual product. For example, at any given point users can pull a specific, unique product up on screen, and be able to follow that product’s journey from the arrival scan to the end sale. From that information, reports can be made to provide unique data like product trends, replenishment information, and product visibility and display success.