Item-Level RFID: Minimizing Shrink Without Sacrificing Experience

Originally posted on SalesTech

By Oleksandr Martyshko, Senior Mobile Software Architect at Teamwork Commerce

In today’s cost of living crisis, price-sensitive customers and fierce competition are proving to be a pressing challenge for retailers. The rise in shoplifting rates is only exacerbating the situation, increasing the difficulty for retailers to sustain their profits. In fact, US retailer, Target, is expected to lose $500 million from its 2023 profits due to missing inventory.

Leading UK supermarkets, including Sainsbury’s and Morrisons, have introduced self-checkout barriers to curb shoplifting. However, these solutions only seem to be damaging the customer experience and slowing the checkout process at one of the most important touchpoints in the customer shopping journey.

What’s more, uncertainties persist as to whether these barriers are effective enough to reduce shoplifting. In reality, shoplifters can easily evade these barriers. There is nothing to stop someone from taking a few high-value items from the shelves, scanning a pack of gum at the checkout and using the resulting receipt to leave without being noticed.

Retailers are right to prioritize their efforts in reducing shrink. However, they must keep the bigger picture in mind. The best available solution should be able to both minimize theft without the consequence of a poor customer experience. Fortunately, in today’s technology-driven retail environment, RFID can deliver exactly that.

Curb Shoplifting Through RFID

RFID technology can deliver a seamless buying experience by automatically scanning all items in a shopper’s basket within seconds, and providing customers with the ability to check out independently at their own pace. This speeds up and creates a more seamless checkout process for shoppers while reducing in-store queuing. It also allows staff members to allocate time to deliver high-quality and tailored customer experiences elsewhere within the store. However, it also plays an important role in minimizing theft.

Retail shrink – and shoplifting in particular  – is one of the most damaging factors in retail losses, and must be reduced in order to drive profitability. Retailers need to find viable solutions that enhance in-store security, and RFID-powered self-checkout technology can provide exactly that. Advanced self-checkout kiosks, powered by RFID, are capable of triggering alarms in case a shopper attempts to take a tagged item without paying for it.

Retailers can effectively track and monitor inventory by attaching RFID tags to products at item-level. This improves the detection of unauthorized removal or theft. RFID-enhanced security assists retailers in asset tracking, creating a safe shopping environment and minimizing losses.

The technology can also be used to curb returns fraud, which cost retailers in the U.S $84.9 billion in 2022. NRF calculated that for every $100 in returned merchandise accepted, U.S retailers lose $10.40 to return fraud. With RFID tagging, in-store associates are able to instantly identify whether a so-called ‘returned’ item was ever previously purchased in the first place.

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Minimize Retail Shrink

RFID can also empower retailers to reduce shrink by enabling retailers to track their inventory in real-time throughout the supply chain. Using RFID tags, retailers can increase efficiency and accuracy alike, gaining clear visibility of all tagged products from the warehouse through to the shop floor.

Deploying RFID solutions not only allows retailers to identify specific missing items, but also informs them of when and where they get lost. With clear knowledge of where their inventory goes missing, retailers can identify critical spots. They can then take appropriate action to mitigate their losses.

Improve Customer Experience

Retailers aim to provide shoppers with an easy and enjoyable shopping experience. This relies on a number of factors, namely personalization, convenience and speed. Traditional POS systems can often lead to long queues and wait times. This can negatively impact the overall customer experience. To deliver top-tier customer service, retailers should look to deploy advanced solutions that cut checkout times and optimize the number of transactions completed during operational hours. Retailers can leverage RFID-powered self-checkout systems to create convenient and fast checkout experiences.

As the final touchpoint for most customers, a convenient and speedy checkout has the potential to make or break their in-store experience and influence their decision to return to the retailer. Retailers who can simplify checkout processes can deliver high-quality experiences that create a loyal customer base.

As retailers continue to confront the challenges of driving profitability with such high competition alongside the rise in shoplifting, they must ensure they are deploying the best technical solutions to position themselves at the forefront of the market and continue to sustain revenue. RFID technology can significantly reduce shrink through shoplifting whilst assisting retailers with inventory management and tracking. However, most importantly, it plays a crucial role in helping retailers improve the overall customer experience with a speedy checkout process.

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