Hello, everyone. Welcome into another sizzling hot episode of Herb's hot takes. I'm your host Tyler Karen. Join as always by herb Billings himself herb. Welcome to another episode. How you doing great today, Tyler. How are you? I am doing well. I'm excited for this episode because last episode, we started a series on RFID. So we talked about the history of RFID, what it is, and today we're gonna dive into some of the main drivers driving retailers to adopt RFID technology So today's gonna be a really fun episode just to get a little bit more into the nitty gritty of RFID Herb. You ready to take this on? I hope so. So kick us off just with a little bit of a recap about what we talked about last time, a little bit of the history and what RFID is. Sure. Well, RFID is an an exciting technology for retailers that's recently become more cost effective for them to implement. But it is not a new technology. It was developed in World War II to identify Friend versus Foe on the airplanes by the British. And then, of course, it's used in a number of but the one we're interested in, of course, is retail. Absolutely. We are definitely interested in discussing the retail industry. And so today, we're talking about those drivers that are prompted retailers to implement RFID. So talk to us a little bit more about that. What what is kind of pushing retailers to utilize and adopt this technology? Well, there are four main use cases. That we see as the primary reason for implementing RFID in a retailer. And then there are other ones that are typically add ons once you get it implemented. The four most important, and I'll dive into these individually. But the four are it improves inventory record accuracy. It reduces the manual labor time around inventory management tasks You can implement it for anti theft and then display compliance, making sure that you have one of everything on the floor. Mhmm. So diving a little deeper into the improved inventory record accuracy, we see this one as generally the primary use case for most of the tailors. If you have a barcode, a barcoded inventory stock, what ends up happening is you try to count everything in your store once maybe twice a year. The once a year is for your annual physical inventory, the audit that the lovely auditors do, and you wanna make sure that you've double checked everything in your store. The second count in a year might be for replenishment purposes. Typically, we see it prior to a big selling season like the holiday season at the end of the year. If you're doing barcodes, Once or twice a year, your average inventory record accuracy right before you count is somewhere around thirty five percent What that means is thirty five percent of your SKUs in a store have the right count in your system that matches the actual count out in the sales floor and in your backroom. This is a problem for omnichannel a huge problem for omnichannel, and it's a huge problem for retailers today. They really need much better inventory record accuracy. RFID allows you to count the items much faster up to forty times faster than barcodes. So that means you can actually count once a week if you like in your stores. If you're counting everything once a week, you are going to be maintaining about a ninety eight percent or higher inventory record accuracy. Now why is this important? It sounds like a number that, you know, oh, we've got a great metric now at ninety eight percent inventory record accuracy isn't that wonderful. What it really means is your replenishment is more efficient, and on time, you're reordering again on time. This allows you to sell to the last item, you have confidence in your records. You can reduce the safety stock. That's the stock that the retailer says, we're not going to sell this in an electronic medium, we're not gonna sell it digitally if it's below a certain quantity. If they don't trust their records, then that quantity is higher. And anytime you have to increase your safety stock, you're doing several things. Your inventory carrying costs go up and you are running a risk of having significant markdowns at the end of a season. Mhmm. So this costs a lot of money. And like I said, it's required for omnichannel. When you have accurate stocking, you know where it is in your store, you are much -- it's a much quicker fulfillment for buy online pickup in store, or click and collect as our European partners call it, and it's also faster for ship from store, which is very popular among retailers these days, because the store is closest to the end, to the end user. A recent study just about two years ago study the effects of counting more often. Now this does not require RFID. RFID just enables you to do it much faster. But if you count more often whether it's barcodes or RFID, you can actually increase sales. They found a four to eight percent sales lift in the time covered by the additional counts. That study is very important, and I can point you in the direction of that if you contact me on LinkedIn. It prescribes a way to actually do the test in your own retail environment using your own merchandising your own your own statistics. That's also a topic that we've covered here on the show before, and so Definitely, if you haven't checked out that episode of Herb Takes, I recommend going back and checking that one out. So, yeah, that's a great point. RFID can also reduce the manual labor time. Yeah. This is all all around your inventory management tasks. Receipt, whenever you receive items in the store from the DC transfers between stores or back to the DC, back to front clinishment. You can automate that process and send notifications so that you are not out of stock on the sales floor. It can increase It can increase your accuracy because now you are able to do an audit of all of the items coming in. Whenever you do an audit of the items coming in with bar codes, very often you well, you absolutely have to open the box and count every single item. Sure. If you're doing an audit using RFID, you can just receive the box. You don't have to open it. So instead of the five to ten percent audit, we often see on receiving, you can do a hundred percent of them. So it increases your your accuracy from mistakes in that area as well. And that's a big area for for accuracy mistakes. Yeah. And then it can save up to we see up to fifty percent of time on the receiving function. Wow. Then there's also the anti theft that I mentioned. Yes, anti theft has been around for a long time, but RFID, the the EPC tags that retailers are putting on, now provide one solution for electronic article surveillance plus speedier checkouts, and obviously the counting function, as we mentioned. So it's one technology to cover all of those. One of the big reasons we've also seen is display compliance. You know, when a shopper walks into a store, and see something they like. If they don't see the size that they need, they'll ask a sales associate. If they don't see a color they need, it's less likely they will ask a sales associate. And if they don't see the style at all, what would you possibly be asking the sales associate? You have no idea what do you have this and something that looks different and has a different material? And -- Right. -- no, you don't do that. So you absolutely are going to leave without being without buying something that you intended to buy. So display compliance makes sure that you have one of every style -- Mhmm. -- or one of every style color combination on the sales floor at all times for your brick and mortar shoppers to Peru. It's very, very smart. Very smart. Well, it sounds like RFID is a really exciting technology for for retailers and really helps solve some pretty key problems then that that retailers have been grappling with to a certain extent? It sure does. Those are the four main use cases that bring RFID into the retail house. Now there are a few others that they can build on later for marginal that they can build on later for incremental ROI. So customer and product flow one thing you can do is place fixed readers throughout the store. And in a simple way, you can identify the items that have transferred from the back floor, you can identify the items that have transferred from the backroom to the sales floor, You can identify, I've seen an implementation where you can identify the items that go into a fitting room. And the cool thing there is you identify those that go into the fitting room but never make it to the point of sale. Interesting. So you can identify problems with products well before they they hurt you as a markdown. You can also track associate flow and make sure that your store layout is appropriate for efficient flow. And you can also track your equipment and assets that way. Well, Herb, it really sounds like RFID is an exciting technology, and you can really see the benefits and how is driving value for for retailers. Right? Oh, we sure can. And that's why we partnered with sequential Europe's leading provider of RFID software called Octoplus. We intend to provide that to our retailers, both current and future clients, as we help them along their RFID journey. That's really, really fascinating. And just I think an excellent explanation of what's driving this current adoption of RFID, sir Herb. Thank you for breaking all that down for us. Thanks for having me today. Absolutely. Well, everyone, this was the second part of a five part series on RFID. So you wanna stick around and catch upcoming episodes For instance, our next episode is gonna cover how RFID helps supply chain management as well. Obviously, that is a big topic of conversation as we sit here recording this today, supply chain is in the news quite a bit. And so you wanna check out how RFID is making a dent in that area as well. So stick around for that on upcoming episodes of Herb Satakes. But for this one, for her billings, I'm Tyler Kern. We'll talk to you again soon.
