How RFID Technology is Helping Retailers Reduce Shrink
One of the major problems that stores all over the world have been dealing with for a long time is retail shrink. A whole range of problems, including theft, administrative errors, and even the misplacement of inventory, have a negative impact on the bottom line as well as the customer experience. While retailers are struggling to find a way to increase their operational efficiency and at the same time tighten security measures, RFID (Radio Frequency Identification) has become one of the most powerful solutions in the field of loss reduction and maintenance of accurate inventory visibility.
In this article, we will look into ways of preventing retail shrinkage with the help of RFID and the reasons why RFID retail inventory tracking is becoming indispensable for contemporary retail
Understanding Retail Shrink: A Growing Concern
Retail
- Shoplifting and external theft
- Employee theft
- Administrative errors or manual mistakes
- Damaged or misplaced items
- Supplier fraud
Traditionally, businesses have relied on CCTV, manual audits, barcode scanning, and EAS tags to detect theft. However, these methods offer only limited visibility as they can identify theft at the exit but cannot prevent errors or assist in real-time tracking within the
How RFID Works in Retail
Radio waves from the RFID system are used to identify and track items which are done through the small RFID tags that are attached to the products. These tags can be quickly scanned without the need for a direct line of sight or manual handling by the use of fixed readers, handheld readers, or smart gates.
In contrast to barcodes that need to be scanned individually, RFID is capable of reading hundreds of items within a few seconds, thus, it is the most suitable for retail environments that are
1. Real-Time Inventory Visibility: The Foundation for Preventing Shrink
Stock mismanagement is probably the major cause of shrinkage where items that have been misplaced, mis counted, or not documented properly are quite common. An inventory system that is barcode based is very much reliant on manual input, which in turn, increases the number of mistakes.
By implementing an RFID system for retail inventory tracking, retailers get to enjoy:
- Precise 99% inventory visibility
- Fully automated cycle counts
- Real-time stock updates between backroom and sales floor
- Improved replenishment accuracy
It is definitely less likely that a loss of merchandise due to wrongful placement or administrative errors will occur when store staff are aware of the exact location of each item.
RFID is a technology that gets rid of blind spots, which, for instance, are quite difficult to manage in the fashion, electronics, cosmetics, and accessories industries where goods are of a small size and are easy to
2. Theft Reduction: Tracking Every Item in Real-Time
Theft both internal and external has been a major factor of retail shrink over the years. RFID is instrumental in theft reduction in a number of ways:
a. RFID enabled Security Gates
RFID gates at the store exit are the sources of alerts when a tagged item is taken away without being rung up. In contrast to the old EAS systems, RFID singles out the exact product that is being taken.
b. Zone Based Tracking
With RFID, product movement can be tracked in:
- Store floor
- Fitting rooms
- Stock rooms
- High value sections
In case an item has been moved to a lodge without authorization, the staff will get instant
c.
The presence of RFID security systems is likely to deter criminals from trying to commit illegal acts intentionally.
d. Reducing Employee Theft
Local theft of staff will be greatly decreased as a result of every product being fully accountable.
They have thus leveraged physical tracking and real-time data to the store staff’s advantage whereby they have finally been able to regain control over the flow of goods in the
3. Preventing Administrative Errors and Manual Mistakes
Retailers
- Incorrect barcode scans
- Incorrect pricing
- Missing records
- Unrecorded damages
- Errors in manual stock counting
With RFID technology, the process is fully automated:
- Counting can be done in a few minutes instead of several hours
- Item data is instantly changed in the system
- Employees are not required to physically look for items
- Receiving and dispatch are getting automated
It substantially limits the opportunities for expensive human mistakes and is a way of ensuring that accuracy is maintained in all
4. More Efficient Supply Chain & Stock Movement
Shrink
RFID makes it easier for retailers to track:
- Goods arriving at the warehouse
- Inventory dispatched to stores
- Transport discrepancies
- Damaged shipments
- Incorrect deliveries
- Supplier fraud or misreporting
Such a significant decrease in losses due to the automatic verification of items at every checkpoint is achieved by the
5. Faster Stock Counting and Replenishment , Fewer Lost Sales
It is typical of retailers to have shrink that results in lost sales since the product is physically available in the store but missing from the shelf. Eventually, RFID technology comes to the rescue by allowing:
- Automated shelf replenishment
- Real time out of stock alerts
- AI powered stock placement recommendations
- High accuracy in cycle counting
Imagine a store worker having the ability to quickly and easily perform an inventory check of the whole store by walking around with an RFID handheld reader.
Properly stocked shelves free from shrinkage not only increase customer loyalty but lead to safer stores as
6. Tracking High Value Items With Precision
Categories
- Jewelry
- Electronics
- Designer apparel
- Cosmetics
- Footwear
- Perfumes
are highly likely to shrink in value because of their small size and high price.
With RFID, retailers can give each product a unique ID. So it becomes possible to know:
- Who handled the item
- When it was moved
- Which zone it was taken to
- Whether it left the store
- Whether it was sold or returned
No such barcode or manual system can come close to such exactness in
7. Improved Accuracy in Returns Management
Improper or dishonest returns are one of the biggest causes of retail shrink. With RFID, the following can be verified:
- If the item being returned was initially purchased from the store
- If the item has been utilized or altered in any way
- If the price corresponds to the sales transaction
By doing this, the occurrence of counterfeit returns is avoided, and the company’s profits are
8. Enhancing Operational Efficiency While Reducing Shrink
RFID
- Lower labor costs
- Greater staff efficiency
- Shorter waiting times at checkouts
- Enhanced omnichannel fulfillment (BOPIS, Ship from store)
- Higher customer loyalty
As a result of well functioning inventory systems, the risks of shrinkage have dropped to very low
Conclusion
As retail shrink keeps getting more difficult to deal with, RFID has emerged as one of the most potent and economically viable solutions for loss prevention. Hence, with real-time visibility, accurate tracking, automated replenishment, and excellent anti-theft capabilities, RFID enables retailers not only to save their assets but also to upgrade customer experience.
For the retail business which is in a dilemma of how to prevent retail shrinkage, the implementation of an RFID-based retail inventory system is permanently out of the question, it is a must for business continuity and expansion.
If you want to know more about the benefits of RFID technology in your retail business, Acube Infotech is the place where you find a complete RFID system, integration, and support customized to your