Application of

RFID in Retail

Bangkok, May 11th 2006

Alan McNab, alan.mcnab@symbol.com

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 Bar Code Value Worked
Backwards into the Supply Chain

Advanced
Data Capture

Symbol’s Focus on Supply Chain

Technologies - Yesterday

Mobile Signature
Kiosk Capture
MK1100 Terminals
PD8500
Mobile
Computer Point of
Mobile PDT6100 Sale Scanners
Computer
LS2208
PDT6100
Rugged
Rugged Mobile Rugged
Mobile Computer Mobile W-LAN
Computer w/ WAN Computer Infrastructure
MC9000G MC9000S MC9000G WS2000
Industrial W-LAN
Handheld Infrastructure Checkout
Scanner
Forlklift WS 2000
Mounted Rugged
LS3408 ER
W-LAN Shelves
Computer Mobile Infrastructure
VRC8900 Computer WS5000
MC9000K
s
G ood
Store
of
W-LAN
Infrastructure Flow Distribution Center
WS 5000

Transportation

ation
Supplier Plant Flow of Inform

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 5

Symbol’s Focus on Supply Chain

Technologies - Today
Rugged
Mobile Shelf
RFID
Computer AR 400
w/ RFID
MC 9000 RFID
EAS
RFID Enterprise
Digital Mobile Signature
AR 400 + Enterprise Assistant
RFID Tags Kiosk Capture
Digital MC 50 MK1100 Terminals
Rugged Mobile Assistant
Computer PD8500
w/ RFID MC 50
Enterprise Mobile
Digital MC 9000 RFID Computer
Assistant RFID Point of
Mobile PDT6100 Sale Scanners
MC 50 DC 400 Computer
LS2208
PDT6100
Rugged
Rugged Mobile Rugged
Mobile Computer Mobile W-LAN
Computer w/ WAN Computer Infrastructure
MC9000G MC9000S MC9000G WS2000
Industrial W-LAN
Handheld Infrastructure Checkout
Scanner
Forlklift WS 2000
Mounted Rugged
LS3408 ER
W-LAN Shelves
Computer Mobile Infrastructure
VRC8900 Computer WS5000
MSP
ods
MC9000K
Store
of G o
W-LAN
Infrastructure Flow Distribution Center
WS 5000

Transportation

ation
Supplier Plant Flow of Inform

RFID Solutions for Retailers

Operational Benefits Business Benefits

• Reduces labor “touches” • Increased sales through
• Real-time visibility of inventory improved in stock positions
• Increases material handling speeds • Enhance Customer
• Accelerates decisions at Experience & responsiveness
point of activity
• Increased accuracy & visibility
• Improved error correction
at the edge • Real-time decision making

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 Early RFID Forecasts

Phase III:
Item Level
Phase II: •Customer insight
•Shelf availability
Case Level •Self checkout
Phase I: •Quality Control
•Returns
Pallet Level •Distribution Productivity
•Maintenance
•Shipping & Receiving •Tracking and Tracing
•Tracking and tracing •Inventory management
•Inventory mgmt •Asset management
•Asset management •Shelf maintenance
•High value goods

US Retail RFID Spending (IDC)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

What we are seeing today…

Phase III:
Item Level ROI – Closed Loop Applications

Phase II:
Case Level ROI

Phase I:
Pallet Level ROI
US Retail RFID Spending (IDC)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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 RFID Today:
Retail Supply Chain Visibility
Retailer DC ISSUE
• $69B in lost revenue* due
to out of stocks
• Poor inventory velocity
from DCÆStoreÆShelf

Suppliers SOLUTION
• Supplier Compliance:
Tagging all cases & pallets
• RFID to automate visibility
& tracking onto shelf
RESULTS
• Increased inventory velocity
Retailer Store from DCÆStoreÆShelf
• Real-time visibility
• Inventory reduction
• Better supply-demand
alignment
*Retail Out of Stocks: A Worldwide Examiniation of Extent, Causes and Consumer Response, Emory Univ, Univ. of St Gallen, and Unvi. Of Colorado, 2002

One Market Force

Annual Revenues = $315.6B

Net Income = $ 11.2B
Profit Margin 3.5%

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 Wal-Mart ROI Study
May 5th, 2006

29-week study analyzed out-of-stock merchandise at 12 pilot stores

equipped with RFID technology and 12 control stores without the technology

Business Objective: Drive improved product availability for its customers

30%
Results of the
16% reduction in product out-of-stocks
Impact of RFID:
Manual orders placed by stores were
reduced by approximately 10%

Results of EPC Reduction in out-of-stocks on EPC tagged

tagged vs. items at a rate three times faster than that of
non-tagged: the non-tagged items within the same store

Cold Chain Applications

• Date
• Location
• Temperature
• Authentication

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Number 1 Issue for Retailers

Out of Stock is the #1 Concern:

• On average 7.1%* of SKU’s are out
• Some categories of SKU’s up to 30%
• Most stock is available but not on shelf

Why?
• Can’t find it
• No tools
• No time
• Not their problem
*Source: Efficient Consumer Response (ECR) Europe

Early Adopters in Item Level

Tracking

Yodobashi

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Item Level Tagging Best Target
Markets
Apparel – significant variety
management challenge to maintain
stock, some categories of sufficient
price
CD/DVD – many titles, significant
organizational challenge in maintaining
stock and display
Shoes – significant variety,
especially helpful in self-service shoe
departments
Some factors that make in-store retail
attractive:
• Many sizes and varieties
• Hard for customers to find
• High shrink/high loss
• Time sensitive – needs to sell quickly
• Goods heavily handled by consumers
• High price points

The Basic Application

• Tags are applied to selected categories of merchandise

within a designated group of stores

• RFID devices are used to conduct rapid, accurate, and

frequent product cycle counts, leading to significantly
more accurate, near real-time information, which can be
used to:

1. Increase sales through improved in-stock position

2. Relocate mis-placed goods (misplaced goods are
effectively out of stock)
3. Rapidly locate items sought by customers on the retail floor or
in the backroom, (e.g. size, color)
4. Identify shrink quickly (reduce loss)
5. Reduce manual inventory costs (reduced labor)
6. Replace EAS systems (in the future)

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The Ideal Scenario

• RFID tags are attached • The updated on-hand detail is

to all items in one or used to drive immediate
more categories replenishment

• A handheld RFID reader • Symbol has demonstrated an

is used to quickly take effective 97% read on cloth
daily cycle counts based goods stacked on a
typical retail shelf

Will In-Store RFID Work For Me?

1. Is replenishment a problem for me today?

2. Do my goods turn quickly enough that stockouts are an
issue?
3. Do I stock many varieties of a good (colors, sizes, titles) that
make in-store availability particularly challenging?
4. Is brand substitution likely?
5. Is the unit value of my goods high enough to justify a tag
cost?
6. Are the goods which I am selling RFID friendly? Yes means
that they can be read easily (and at lower cost)
7. Is it easy for me to control how these goods are tagged? Do I
have them made for me or do I tag goods myself in the DC or
store?
8. Does a lost sale have a multiplicative effect on revenue loss
for me? (I can’t buy the bra so I don’t buy the matching
underwear)

KEEP IN MIND: These are questions you ask about categories of

goods individually, not the whole store or the mix

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 What Affects These Costs?

Tag Commissioning

• Commissioning = Attaching a tag to an item and

associating it with information critical to restocking –
SKU, size, color – dependent on product category

• Commissioning is easiest and cheapest when done

at the point of manufacture – products over which
you have a lot of control (closed loop) are a good
place to start

• Commissioning can also occur at the DC,

at a specialty tagging operation, or
in the store, albeit typically at a higher cost

Store of the Future

Inventory Price Check Dressing Room

Readers Readers Readers

Integrated Shelf
Security Readers

Employee Shipping Mobile

Access & Receiving Readers

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Thank You

Questions?

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