6 Key Uses of an Intelligent RFID Counting System in Retail

RFID stands for radiofrequency identification, and it is a technology that has seen much use in asset tracking and inventory management. An RFID counting system is so simple yet powerful that it has many possible applications, especially in retail.

How an RFID Counting System Works

In an RFID counting system, RFID tags are attached to the merchandise. Every RFID tag has a unique number, an electronic product code corresponding to an entry in the database that provides more information about that item or product.

An RFID reader or interrogator activates the RFID tag, and the tag responds by sending its data back to the RFID reader. The RFID reader, in turn, transmits the data it receives, plus its own information and the date and time of reading, to the database.

Computer software reads the data provided by the RFID interrogator, providing actionable insights or information. For instance, the software will tell the asset or inventory manager about missing items or resources.

The following are some ways by which an RFID inventory management system can be helpful to your retail business.

Eliminate Manual Counting and Improve Inventory Accuracy

Install an intelligent, automated RFID system to get real-time stock levels data. This requires you to tag all of the merchandise displayed in your store and your stockroom.

Ceiling-mounted RFID readers, at the very least one for in-store and one for your stockroom, will make minute-by-minute automated sweeps of their designated areas fast and convenient. This will give you an up-to-date, precise in-store and stockroom stock count in real-time.

An intelligent RFID counting system like this will eliminate the onerous chore of manually counting stocks so your staff can be more productively employed elsewhere. More importantly, this will give you unparalleled inventory accuracy.

Set Understock and Overstock Alerts and Make Intelligent Business Decisions

Since an intelligent RFID inventory system will give you real-time updates on stock or inventory levels, you should be able to set stock replenishment thresholds. Your inventory system can then send you an alert when inventory levels fall below such thresholds.

This will remove the need for manually checking and rechecking your stock levels to ensure you do not miss the proper timing for ordering fresh stocks. Consequently, you will reduce out-of-stock issues and increase on-floor availability, helping you prevent losses from missing sales opportunities. This should lead to a sales uplift of around 1 to 10% or more.

An automated RFID inventory system will also help you mitigate overstocking problems. Since you can easily see which categories of items are overstocked, you can devise timely campaigns to encourage product movement, such as markdowns and add-on sales promos.

Get Alerted on Customer Thefts

Security is a salient application of RFID tracking systems in retail. If every one of your products is RFID tagged, you will have considerable protection against consumer theft.

You can install one or more RFID readers in your store’s entry and exit areas, and an RFID reader will sound an alarm once RFID-tagged merchandise goes beyond a certain point. You can also install specialized RFID readers in fitting rooms, and they will sound an alarm when somebody attempts to tamper with or remove RFID tags.

Detect and Prevent Internal Theft

Your staff knows how items in your inventory are tagged. They also know how to properly remove RFID tags so that their removal will not trigger a system alert. Thus, it is reasonable to suppose that some of your employees could be tempted to steal from your inventory, and you would be none the wiser because your system may be unable to detect the loss.

Thus, it would be best to install inventory checks and balance mechanisms. Use an RFID inventory system to record receipt of supplies or merchandise at the back of the store. This way, everything that goes into your store is immediately logged by your system.

Then let your RFID counting software conduct an audit of the inventory received, inventory available, and inventory sold to flag missing items. Your integrated RFID system should then be able to help you trace such missing items’ journey in your store and help you uncover internal theft if any.

An intelligent RFID system could also ensure that staff will be unable to remove RFID tags without a corresponding sale. This should help deter internal theft.

Automatically Audit Shipment Received

Your RFID system can also help you conduct a speedy audit of supplies or inventory received. When receiving a shipment of supplies or merchandise, RFID readers at your receiving dock or station will do an automated sweep of the shipment received and alert you about inconsistencies between what you were expecting to receive and what was actually shipped.

This speedy auditing mechanism will help you deal immediately with incorrect shipments and remedy the situation promptly.

Prevent Return Fraud

The National Retail Federation says consumers return about 10.6% of total retail sales in the United States in 2020. That’s approximately US$428 billion in returned merchandise. And of these returns, about US$25.3 billion or 5.9% were fraudulent.

There are different types of return fraud. Some customers will return shoplifted items. Others will buy merchandise on sale then get a refund at the regular, higher price. Yet other customers will buy from one store and return the merchandise to another store that sells it for a higher price.

When it comes to electronics, some customers will buy an item then replace it with an identical but non-functioning or damaged item they owned. Others will brick or strip the product of valuable components and return the damaged product. To profit from the price difference, some people will also put a higher price tag on an item than what they originally paid.

An RFID counting system can help you counter return fraud. 

Keeping tags on items sold will help you easily trace the history of returned items. An intelligent RFID system will help you avoid refunding shoplifted items because your inventory system will tag stolen items as missing. You will not have to pay a higher price refund on sales items; your system will show you at what price the product being returned was bought.

You will not have to refund items that customers did not buy from your store, say, merchandise purchased elsewhere or fraudulent replacements. Your system will show you they have never been part of your inventory in the first place. And if you tag valuable electronic components, you can foil attempts to return bricked items.

Beyond Retail Inventory Management

Retailers use RFID counting systems primarily to improve inventory accuracy. So much of sales depends on keeping an accurate record of what retailers have to sell.

However, RFID systems have other valuable applications such as providing automated understocking and overstocking alerts, preventing customer and employee theft, conducting automated audits of received shipments, and preventing return fraud.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.