Securing retail: The role of RFID technology in reducing theft and loss

Find out how the integration of RFID technology into retail operations promises to be a vital component in the ongoing battle against theft and loss.

RFID in retail

In the dynamic world of retail, where inventory management and loss reduction are ongoing concerns, technology continues to play a vital role in helping brands to safeguard their assets. In recent years, Radio-Frequency Identification (RFID) technology, once primarily associated with supply chain optimization, has become a key component in the modern retail environment, reducing theft and minimizing losses across the sector.

RFID in retail involves the use of wireless technology to track and manage inventory on a daily basis. Retailers attach RFID tags, which contain unique identifiers, to their products, allowing the efficient tracking of the items throughout the supply chain, as well as in store. Unlike traditional barcode systems, RFID enables real-time data capture without line-of-sight requirements, enhancing the speed and frequency of inventory counting, improving inventory accuracy, and streamlining retail operations.

By integrating RFID into their processes, retailers can enhance security measures, deter theft, and reduce loss of assets, providing huge cost savings. Let’s take a closer look at these benefits.

Real-time inventory management

One of the primary advantages of using RFID technology in retail is its ability to provide real-time visibility into inventory. Traditional barcode systems require line-of-sight scanning and are manual labor intensive, making barcode solutions time-consuming and prone to errors from lack of scanning. RFID, on the other hand, allows you to track inventory automatically, without line-of-sight and with greater accuracy. This instant visibility not only streamlines inventory management, but also enables swift identification of discrepancies, aiding in the early detection of theft or loss and correct fulfilment requirements.

Global sports equipment and apparel retailer, Decathlon, has embraced RFID technology to automate checkout, optimize its inventory management processes, as well as to enhance security. RFID tags are applied to 100% of their products, allowing real-time tracking of each of their items throughout the supply chain and in store. This not only aids in reducing cost and theft but it also facilitates a user-friendly online shopping experience for the consumer, enabling consumers to shop for even larger potential purchases, such as bicycles, via their website and see in real time which stores currently have it available in stock.

Enhanced security

RFID tags act as a powerful deterrent to theft. When potential shoplifters realize that merchandise is equipped with security tags, they know the risk of getting caught increases significantly. The technology can be integrated with store security alarms and surveillance systems so, if an item with an active RFID tag exits the store without proper authorization, the alarms would be activated, alerting personnel to a potential theft. At the same time, the RFID tags can be easily reactivated if goods are returned to store, enabling returned items to be purchase authenticated and made available and visible in the store inventory again.

One early adopter of RFID in retail was Marks & Spencer (M&S), a British multinational retailer, which originally trialled the technology on men’s suits back in 2003. Due to its success in improving inventory accuracy, they proceeded over the coming years to roll out the tags to other apparel items. As the technology advanced, M&S later extended this further to cover a variety of smaller items, such as beauty products, which had historically been difficult to track. Richard Jenkins, their Head of Retail Loss Prevention, now estimates that the business uses around 350 million RFID tags per year!

Minimizing shrinkage

Shrinkage, mainly caused by theft, administrative errors or supplier fraud, is a constant challenge in the retail industry. RFID technology helps address all these issues by providing accurate, real-time data on product movement. This helps you to identify patterns of suspicious or irregular behavior, allowing you to take proactive measures to reduce theft and loss.

According to Retail Economics, the cost of retail theft in the UK in 2023 was estimated to reach £7.9bn, with customers accounting for around 60% of the loss value and employees making up the remaining 40%. In the US, the National Retail Federation’s latest Retail Security Survey shows shrinkage as accounting for $112.1 billion in retail losses in 2022. With figures like this, it’s easy to see why more and more retailers are implementing RFID solutions to achieve a more robust, efficient and profitable operation.

The impact of RFID in retail

RFID is playing a crucial role in maintaining the delicate balance between consumer satisfaction, operational efficiency and loss prevention. By investing in RFID technology for asset tracking, retailers not only protect their assets against theft, but also create an environment where consumers can enjoy a seamless and secure shopping experience.

‘Measuring the Impact of RFID in Retailing’, an independent research report commissioned in partnership with ECR Community’s Shrinkage and OSA Group, and produced by Professor Adrian Beck of the University of Leicester, is understood to be the world’s most comprehensive study into the use of RFID in retail. The study follows 10 large retailers (including Marks and Spencer mentioned above) that have invested in RFID and found that all participants had achieved impressive results since the introduction of the technology. The figures included increases in sales of between 1.5% and 5.5%, improvements in stock accuracy from 65%-75% to 93%-99%, as well as significant improvements in stock availability and other benefits, all of which contributed to their return on investment.

These examples demonstrate how retailers from various sectors have leveraged RFID technology not only to streamline their operations, but also to reinforce their efforts in minimizing theft and losses. As the technology continues to advance, it’s likely that more retailers will explore and adopt RFID solutions to enhance their security strategies.

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