European Journal of Information Systems (2012) 21, 255–267
& 2012 Operational Research Society Ltd. All rights reserved 0960-085X/12
RESEARCH ARTICLE
A balanced scorecard for item-level RFID
in the retail sector: a Delphi study
Narges Kasiri1,
Ramesh Sharda2
and Bill Hardgrave3
1
Division of Economics and Business, SUNY
Oneonta, Management, Marketing and
Information Systems Department, Oneonta,
NY, U.S.A; 2William S. Spears School of Business,
Oklahoma State University, Institute for
Research in Information Systems, Stillwater, OK,
U.S.A; 3College of Business, Auburn University,
Auburn, AL, U.S.A.
Correspondence: Narges Kasiri,
Management, Marketing and Information
Systems Department, Division of Economics
and Business, SUNY Oneonta, 316 Netzer
Building, Oneonta, New York 13820, U.S.A.
Tel: þ 6 07 436 2544;
E-mail: kasirina@oneonta.edu
Received: 6 May 2010
Revised: 14 July 2011
Accepted: 15 July 2011
www.palgrave-journals.com/ejis/
Abstract
Item-level Radio Frequency Identification (RFID) adoption is on the agenda for
many retailers. However, before adopting this technology, managers need to
be able to identify its direct and indirect benefits. These benefits are expected
to be significant and have begun to be studied empirically and analytically in
narrow, isolated segments (e.g., supply chain management). In this paper, we
focus on applications of RFID in the retail sector, specifically in store operations.
We have adapted the balanced scorecard (BSC) model as a decision-making
framework to build a holistic model of RFID-enabled changes throughout retail
store operations including marketing, merchandising, and supply chain mana-
gement. After reviewing the existing literature, we conducted a Delphi study in
which 10 consultants and senior managers from leading U.S. retailers were
interviewed. The results indicate that benefits in the areas of merchandising
and marketing may not be realized as directly as those in the supply chain, but
their effects should not be underestimated. The proposed BSC model can also
indicate potential opportunities for item-level RFID use in retailing and serve as
a guideline for further studies.
European Journal of Information Systems (2012) 21, 255–267.
doi:10.1057/ejis.2011.33; published online 30 August 2011
Keywords: item-level RFID; retailers; strategic decision making; balanced scorecard;
Delphi method; operations management
Introduction
Many retailers are considering adopting item-level Radio Frequency Identi-
fication (RFID) in their operations. Prior to investing in any technology,
including RFID, retailers need to understand its potential benefits and
explore the potential financial outcomes, such as return on investment,
sales increases, and costs of implementation. Most available studies on
item-level RFID examine its impact on improving supply chain operations
in order to avoid out-of-stock (OOS) situations and inventory inaccuracy
(e.g., Gaukler et al, 2007; Bai et al, 2009; Rekik et al, 2009; Zhou, 2009). The
supply chain may be the first area in which retailers benefit from RFID, as is
shown in many pilot and case studies, for example Galeria Kaufhof
(Loebbecke & Palmer, 2006; Frederic et al, 2009), Walmart (Hardgrave et al,
2008), Dillard’s (Hardgrave, 2009a), American Apparel (2009), and The Gap
(Abell, 2003). The benefits to the supply chain may be immediate, but
other areas such as merchandising and marketing can take advantage of
item-level RFID technology as well. For example, promotion planning and
execution and customer service could potentially be enhanced with RFID.
In this paper, we adapt the balanced scorecard (BSC) approach to build
a comprehensive model for tracking how RFID-enabled changes in store
operations influence operational-level performance measures linked to
256 BSC model for item-level RFID
financial performance. The BSC approach, introduced by
Kaplan & Norton (1992, 1996), evolved to model a stra-
tegic management system by which one can follow how
various performance measures of operations in organiza-
tions lead to financial performance. The original BSC
emphasized clustering performance measures into four
perspectives – financial, internal business, customer, and
learning and growth – that all relate to strategic financial
objectives. Kaplan & Norton (2000) later expanded the
method by elaborating on the causal relationship bet-
ween scorecard performance measures within and across
dimensions. This framework can be useful in investiga-
ting the impact of RFID on retail operations as well.
Based on the literature and our Delphi study, we deve-
lop a new BSC model in which we examine the links
between financial performance and three dimensions
that succinctly describe retail operations: merchandising,
marketing, and the store execution portion of the supply
chain (i.e., inventory control and management (Krafft &
Mantrala, 2006)). A BSC model enables us to look into
operations performance measures in each dimension.
Then, by employing system dynamics concepts, cause-
and-effect relationships between performance measures
in different categories can be determined (Bianchi &
Montemaggiore, 2008). The performance measures and
the causal relationships between them were validated by
a Delphi study in which leading retail experts on item-
level RFID were interviewed. Thus, the paper presents
a methodological innovation in combining a Delphi
study, BSC, and system dynamics concepts to develop
a model for analysis of a specific IT investment decision.
In this paper, we apply this method in the emerging
domain of RFID in retail store operations.
In the next section, we introduce the type of RFID tech-
nology that is most appropriate for retail floor operations.
The third section outlines the BSC model we propose for
item-level RFID, including a literature review and de-
scription of performance measures for each category in
the BSC model. In the fourth section, we report the results
of the Delphi study and present the causal relationships
and disagreements among experts concerning the relative
importance of different categories in the BSC model. The
fifth section includes the discussion of our study findings,
and we conclude with some guidelines for further RFID
performance investigation.
Item-level RFID in retail operations
Point-of-sale (POS) systems with barcode scanning were
the first wave of technology that changed retail opera-
tions significantly. These systems provided information
on customers’ purchases which was useful in managing
inventory, the supply chain, promotions, and advertising
(Fraza, 2000). RFID, the next generation of technology
for retailers, can provide unprecedented visibility into the
movement of products along the supply chain and in
the store, and insights into customer behavior. With RFID
technology, radio waves automatically detect items, read-
ing multiple items simultaneously and instantly. Items
European Journal of Information Systems
Narges Kasiri et al
containing RFID tags do not need to be ‘in the line
of sight’ of the readers and can be read from several
meters away. Therefore, RFID is intended to replace or
supplement barcodes in retail operations (Karkkainen &
Holmstrom, 2002; Prater et al, 2005).
There are two types of RFID tags: active and passive.
A passive tag does not contain a battery and is less
expensive (Rawal, 2009). Power from the tag reader
activates it and extracts information upon request. Passive
tags must usually be less than 10 m from the reader to be
detected. Active tags, on the other hand, have a battery.
They are generally larger than passive tags (due to the
inclusion of the battery), more expensive, more powerful
and can be detected from much further away from the
reader. For item-level RFID in retail situations, passive tags
are probably more appropriate in terms of costs and size
(Prater et al, 2005; Gaukler et al, 2007).
Use cases and analytical studies related to RFID have
focused on a variety of topics in operations, particularly
the area of supply chain management (Gruen et al, 2002;
Sahin, 2004; Atali et al, 2005; Delen et al, 2007; Heese,
2007; Hardgrave et al, 2008; DeHoratius & Raman, 2008;
Wamba & Chatfield, 2009). Although RFID benefits have
been reported in supply chain operations, these tags are
typically applied at the case/pallet level. Item-level RFID
is more expensive to implement and, thus, presents
a more complex decision problem. In the next section,
we describe how a BSC framework was developed to ana-
lyze the costs and benefits of item-level RFID in retail
operations.
Item-level RFID BSC model
The BSC, introduced by Kaplan & Norton (1992, 1996), is
a popular approach to integrating financial and non-
financial measures in a single framework. It has been
adopted in many areas, particularly in modeling and
predicting whether changes at the operations level
can affect financial performance measures (Cobbold &
Lawrie, 2002). BSC models have been widely used in
business studies as measurement systems for strategic
performance (Evans, 2004). They have also been applied
to the supply chain and retailers (Brewer & Speh, 2000;
Banker et al, 2004). In the information technology (IT)
area, BSC models have served as tools to analyze strategic
performance systems and IT investment (Van Der Zee &
De Jong, 1999). IT functionalities are usually integrated
into the operations of business processes; thus, BSC
allows measurement of the operations-level benefits of IT,
leading to measures of strategic financial performance.
Martinsons & Davison (1999) adopted Kaplan & Norton’s
(1992) four categories but introduced new performance
measures in order to demonstrate a BSC framework for
an IT domain. For example, they looked at programmer
productivity related to factors such as the programmer’s
level of expertise and experience as one of the outcomes
of IT systems. However, their framework in the IT domain
does not describe in detail the causal relationships among
the performance measures. Kaplan & Norton (2000)
 BSC model for item-level RFID
Figure 1 Item-level RFID BSC model.
mention that cause-and-effect relationships are necessary
in BSCs to assess performance measures.
The challenge in adapting a BSC approach is to
determine major categories and the corresponding per-
formance measures that are related to financial perfor-
mance. In our domain, retail store operations are divided
into three categories: supply chain, merchandising, and
marketing management (Krafft & Mantrala, 2006). In our
adapted BSC model, we introduce each of these categories
as factors that can directly or indirectly change financial
performance (Figure 1). We identify the performance
measures within each perspective based upon previous
literature and pilot studies. Figure 1 presents a typical BSC
model that is adapted for analysis of RFID in retail. In the
supply chain area, some popular and researched use cases
include reducing inventory inaccuracy, shrinkage, and
OOS. On the other hand, use cases in merchandising
and marketing, such as those related to improving
demand forecasts, the customer shopping experience,
and product pricing, are scattered and their measures are
more descriptive. Of course, customers must be willing to
accept the technology in order for us to observe the
impact of item-level RFID in retail operations. Assuming
that customers’ attitudes are positive toward this tech-
nology (admittedly a strong assumption but appropriate
in considering retailers’ perspectives), we want to capture
any changes item-level RFID makes in retail operations
that affect financial outcomes. The next sections detail
each dimension in our BSC model.
Supply chain management
RFID technology was initially used in retail supply chain
management, specifically at the pallet and case levels. In
2005, for example, Walmart requested some of its major
Narges Kasiri et al 257
suppliers to tag pallets and cases going to specified
distribution centers. Extensive research has shown that
pallet/case-level RFID reduces OOS and improves inven-
tory accuracy, which significantly improves supply chain
management (Gruen et al, 2002; Sahin, 2004; Atali et al,
2005; Gaukler & Seifert, 2007; Heese, 2007; DeHoratius &
Raman, 2008; Hardgrave et al, 2008; Bai et al, 2009).
Our focus in this study is on the store execution
portion of supply chain management, that is, every
operation involved in inventory control and manage-
ment, from receiving items from distributors to deliver-
ing them to customers. These operations include
backstore management as well as shelf management.
Retailers can take advantage of item-level RFID to track
their individual products both on shelves and in the
backstore (Kambil & Brooks, 2002).
RFID enhances information visibility and captures
customer demand, thus decreasing uncertainty in the
supply chain (Gaukler et al, 2007; DeHoratius & Raman,
2008; Zhou, 2009). In the supply chain management
literature, most analytical models measure the benefits of
RFID through simulation (Fleisch & Tellkamp, 2005). Lee
& Ozer (2007) introduced a guideline to measure the
benefits of RFID in the supply chain. Rekik et al (2008,
2009) built a simulation model to measure the benefits of
RFID in reducing errors due to theft and misplacement.
Gruen & Corsten (2008) examined OOS attributes, such
as the rate of lost sales caused by being OOS and OOS
duration, to calculate and quantify the effect of RFID.
Item-level RFID provides different levels of information
visibility depending on the deployment level. We look at
three levels: enhanced inventory visibility, enhanced
shelf visibility, and enhanced storewide visibility. These
visibility levels all lead to the same type of benefits but do
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258 BSC model for item-level RFID Narges Kasiri et al

Table 1 Performance measures on supply chain inaccuracy is reduced because misplacement and theft are
management (Store Execution) detected faster and there are fewer execution errors. In
particular, when retailers face high demand uncertainty,
Process RFID initiatives Performance measures
enhanced item-level visibility on shelves enables retailers
Shrinkage, shelf, Automatic Perpetual Forecasting demand to reduce the impact of this demand variation and thus
and inventory Inventory (PI), error improve performance compared to retailers without such
management Backstore+POS Fewer OOS visibility.
visibility Inventory accuracy The storewide level of RFID implementation provides
Inventory holding maximum information visibility and contributes to
Shelf Visibility, Labor hours inventory management to an even greater extent than
Backstore+POS Customer service
do the other two levels (Table 1). Items can be tracked not
visibility Theft detection
only on shelves and in the inventory but at any place on
Misplacement
the sales floor. In addition, benefits such as identifying
detection
Storewide visibility Shelf theft prevention
customer shopping behavior and preventing theft by
Shelf space detecting patterns are achieved at a much higher rate.

Marketing management
The purpose of marketing is to promote goods and
services within the store. We looked at four marketing
so to different extents (see Table 1). Next, we review RFID- processes which have been influenced by RFID-enabled
enabled changes in inventory, shelf, and shrinkage changes: the customer shopping experience, promotion
management processes at three levels of RFID implemen- planning and execution, electronic pricing, and pricing
tation (initiatives) as listed in Table 1. management. Table 2 shows these processes, and the
At the lowest level of enhanced visibility, the backstore RFID initiatives and performance measures for each
inventory management process is improved by providing process.
RFID readers in the backstore and at POS (Table 1).
Inventory records are updated at the backstore entrance/ Customer shopping experience Enhanced visibility in
exit doors and at POS when an item is purchased. stores can transform the customer shopping experience.
Perpetual Inventory (PI) – that is, what the information For example, shopping carts and dressing rooms can be
system thinks is on hand – is updated automatically equipped with RFID readers and touch-screen monitors
based on this visibility. The visibility of items in that allow customers to search for information on
inventory improves inventory accuracy, and the record products and locate items throughout the stores. Few
of items on the shelves is more accurate. Shrinkage, use cases have been conducted on the impact of RFID on
including theft and misplacement, is detected easily and the customer shopping experience, though the Industry
more often through automatic PI. This level of deploy- Standard store in Ohio deployed smart dressing rooms in
ment seems to have the lowest cost and fewest technical
restrictions among the three levels. Several case studies
from Dillard’s (Hardgrave, 2009a), American Apparel
(2009), and Bloomingdale’s (Hardgrave, 2009b) have Table 2 Performance measures on marketing operations
provided evidence of the benefits of item-level RFID on Process RFID initiatives Performance measures
inventory management in retail stores.
Customer Automatic check-out, Shopping time
The second level of enhanced visibility occurs when
shopping Product locating Shopping convenience
smart shelves are added to the previous level (Table 1).
experience (smart carts, smart Number of customers
This level provides real-time shelf visibility on the store
dressing rooms) Labor hours
floor as well as in the backstore and further improves
inventory accuracy, shelf replenishment, and loss detec- Promotions Enhanced information Promotion forecasting
tion compared to the first level (Doerr & Gates, 2003). planning and visibility, Demand change
The visibility of items on shelves leads to real-time execution Automatic check-out, Customized bonus/
detection of misplacement and theft and, thus, adjust- Product locating promotions
ment of the inventory level. Shelf visibility also allows (smart carts, smart Storewide execution of
retailers to monitor customer shopping behavior to some dressing rooms) bonus/promotions
extent. However, the cost of deploying smart shelves is
significant. In addition, some practical issues with smart Pricing Store and backstore Fewer markdowns
shelf mobility have delayed their use. management visibility Lighter markdown price
Analytical research shows that RFID adoption at the
Electronic Electronic tags, signs Shopping time
shelf level can release shelf space and reduce inventory
price change Pricing errors
holdings (Szmerekovsky et al, 2009) because shelves can
Labor hours
be replenished more frequently. In addition, inventory

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 BSC model for item-level RFID
order to investigate their feasibility and effect on the
customer shopping experience (O’Connor, 2007). Inves-
tigators found that such applications of item-level RFID
are attractive to customers, particularly young people.
According to our research, some retailers are just starting
to experiment in this area.
There are also some case studies (by the Metro group in
Germany) on how RFID tools such as smart carts or smart
dressing rooms can make customers’ shopping faster and
more convenient (Krafft & Mantrala, 2006; Frederic et al,
2009). Assuming that item-level RFID has been deployed
in inventory management operations, smart carts, smart
dressing rooms, and automatic check-out all contribute
to speeding up shopping and providing a more con-
venient shopping environment.
Automatic check-out: Automatic check-out charges cus-
tomers’ accounts automatically when customers pass
through the check-out stations. Customers spend less
time in check-out lines and feel more efficient. In
addition to saving time for customers, automatic check-
out saves labor that can be spent providing customer
service (Table 2).
Product locating by customers: One application of RFID at
the item level is helping customers locate the products
they need. Product-locating tools such as smart carts,
smart dressing rooms, or kiosks enable customers to
locate products more easily and obtain information more
quickly on any individual item. A faster and more
convenient shopping experience changes the store image
and, in the long term, increases the number of customers
(Table 2).
Promotions planning and execution In addition to the
benefits to customers mentioned above, retailers can
monitor and identify their customers’ patterns of shop-
ping (Table 2). For example, useful information can be
derived from the type, size, and color of items that
customers take to the dressing rooms. These patterns help
retailers design their display items according to their
customers’ needs.
Promotional discounts and bonuses at both the
individual/customized level and the store level can be
managed more efficiently in stores equipped with item-
level RFID. Loyalty cards, which give retailers informa-
tion about their customers’ behavior, have been around
for a while, but RFID tools such as smart carts or smart
dressing rooms allow retailers to offer a more appealing
set of promotions and complementary deals and bonuses.
In barcode systems, customers’ shopping lists are revealed
at the point of sale, when customers check out. RFID, on
the other hand, can provide a list of items that customers
intended to buy, even if they did not. This list might be
different from the POS list for various reasons such as
unavailability of items on shelves. In addition, custo-
mized promotions are currently offered to customers
after they receive their receipt; with RFID, the bonuses
Narges Kasiri et al 259
and promotions can be offered before the POS, while the
customer is still shopping, and, consequently, the prob-
ability of their being used is higher. Moreover, given the
enhanced store visibility, storewide discounts and pro-
motions can be coordinated to guarantee item avail-
ability and avoid OOS.
Gillette and Walmart (EPC Global, 2008) measured
how much sales improved through better promotion
execution. They monitored the promotional items in
distribution centers, the backstore, and promotional
displays to provide the items on time and avoid OOS
and achieved a 19% increase in their sales.
Pricing management The original price of items may
not change based on enhanced information visibility
(Table 2). However, such enhanced visibility on shelves and
in backstores may lead to fewer and lighter markdown
prices. About 30% of items are not placed on shelves in a
timely manner and, thus, stay in the backroom so long
they come to the floor at already marked-down prices
(Aberdeen Group, 2008). On-time and fast shelf replenish-
ment increases the number of items sold at full price and
decreases the number of markdowns.
Electronic price change Dynamic price signs and tags
offer a huge cost savings in implementing price changes
(Table 2). Signs and tags for initial prices and markdown
prices are usually handled manually and, as with any
manual process, execution errors can decrease revenue or,
if errors are detected at the POS, result in customer
unhappiness. With the new generation of Electronic
Label Pricing through item-level RFID tags, retailers do
not need to manually set initial or markdown prices for
each item. They only need to update the item prices
automatically by updating the related databases. The
saving in labor costs for price change operations is huge.
Also, the revenue increases when price tag errors are
reduced, and consequently, customer service improves.
Merchandise management
The purpose of merchandise management is to provide
items for customers when customers need them, and
RFID helps to manage that effort (Doerr & Gates, 2003).
Real-time monitoring of items on the shelves improves
information visibility for store managers and increases
the availability of the products to customers. In addition,
less shrinkage and better decisions in managing assort-
ment enhance the merchandise management process.
Table 3 lists merchandising management processes influ-
enced by item-level RFID and associated performance
measures.
Variety and assortment management As mentioned by
Szmerekovsky et al (2009), enhanced visibility of shelf
information reduces the shelf space needed for an item
and releases capital by reducing the inventory holdings.
Therefore, using the extra capital and space, retailers can
offer a wider range of items (Table 3).
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260 BSC model for item-level RFID
Table 3 Performance measures for merchandising
operations
Process RFID initiative Performance measures
Variety and Inventory visibility Variety of products
assortment Shelf visibility Appeal of product
management Store visibility variety
Product locating
tools
Shrinkage Inventory visibility Theft detection
management Shelf visibility Misplacement
Store visibility detection
Theft prevention
Fraud in return
management
Enhanced information visibility and applications such
as smart carts and smart dressing rooms also help
managers determine what products are complementary.
For example, loyalty cards including RFID help retailers
examine customer buying behavior as they look at
different products, assisting managers in selecting a more
appealing variety and assortment of products.
Shrinkage management With item-level RFID tags, retai-
lers can track assets and automatically detect product
shoplifting and misplacement through real-time RFID
information, thus, reducing inventory inaccuracy and
OOS. Moreover, item-level RFID loss detection and
prevention can be employed in return management as
well. For example, item-level visibility prevents custo-
mers from returning items that were not sold.
Item-level RFID can help stop dual losses from
shoplifting. First, it can detect shoplifting by revealing
a full record of the items stolen in order to update
inventory records and avoid OOS/inventory inaccuracy.
Second, item-level visibility can help stores find patterns
in shoplifting by identifying from where the stolen items
are taken. Electronic Article Surveillance (EAS), the
current technology used by retailers, which simply
indicates whether or not a product is taken through
a designated area, can technically be replaced by item-
level RFID tags (Hardgrave, 2008; Frederic et al, 2009).
In the next section, we report the results of the Delphi
study we conducted to validate the three dimensions –
marketing, merchandising, and supply chain manage-
ment (store execution) - and the associated performance
measures in the BSC model. The Delphi study results also
allow us to complete our BSC model and derive causal
relations that describe how and why performance
measures across and within the perspectives are linked
to financial performance.
Delphi study
The Delphi method uses a heterogeneous panel of experts
from differing backgrounds, with controlled anonymous
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Narges Kasiri et al
judgments and systematic refinement, to develop a
consensus among the experts (Hasson et al, 2000;
Linstone & Turoff, 2002). This method allows us to
compile and correlate informed judgments on a broad
topic such as RFID in retail operations from experts
spanning a wide range of disciplines such as marketing,
supply chain, and IT. Given our need to validate RFID
factors and linkages among the factors expected to
impact retail, a Delphi study seemed most appropriate
because it relies upon expert opinions to validate,
produce, and hone the linkages among the factors. On
the other hand, group judgment techniques, such as
brainstorming, that do not follow a particularly systema-
tic procedure, or opinion polls, where responses are not
treated as judgments but as self-reporting, do not seem to
be appropriate for our purposes. Overall, the purpose of
our Delphi study was to validate the performance
measures we collected on how item-level RFID influences
operations in a retail store and to establish the causal
relationships among the performance measures in the
dimensions of the BSC model.
The Delphi method has been used in business research
related to uncertainties in the performance of new
projects and investments (Daniel & White, 2005; Singh
et al, 2009) and in exploratory studies in operations
management (Malhotra et al, 1994; Akkermans et al,
2003; MacCarthy & Atthirawong, 2003; Ogden et al,
2005). Malhotra et al (1994) conducted a Delphi study
to identify and rank major manufacturing issues in
the 1990s. Ogden et al (2005) used the Delphi method
to identify future factors influencing the supply chain.
Akkermans et al (2003) looked into how ERP (Enterprise
Resource Planning) systems can influence operations in
supply chain management. MacCarthy & Atthirawong
(2003), using a Delphi study, identified factors influen-
cing location decisions in international operations.
Panel size and the qualifications of the experts are two
issues in a Delphi study (Delbecq et al, 1975; Linstone &
Turoff, 2002). A literature review by Reid (1988) shows
there is no recommendation for a specific sample size,
and the sizes of the panels in the studies reviewed varied
from 10 to 1585. Murphy et al (1998) show that as the
number of experts increases, the reliability of the panel’s
judgments increases as well. However, they mention
there is no evidence about the relationship between the
reliability and validity of the final consensus and the size
of the panel. In a Delphi study, the expert panel is not
intended to be representative of the population for
statistical purposes (Powell, 2003).
We invited 12 senior retail experts who have been
involved in item-level RFID in the retail sector to
participate, and 10 of the 12 agreed to join the panel.
All participants in our study remained anonymous in
order to reduce bias in the responses to our question-
naire. Four experts were from consulting companies in
RFID and six were from nation-wide retailers, so their
expertise covered a wide range of categories in retailing.
The retailers were from leading apparel stores and giant
 BSC model for item-level RFID
grocery stores. Forming such an expert panel was difficult
given that only a few pilot studies have been done, and it
was important that both consultants and retailers eva-
luate the benefits of item-level implementation. Con-
sultants are usually the advocates of item-level benefits in
stores whereas retailers are skeptical by nature.
For our Delphi study, an initial questionnaire com-
prised of open-ended questions was designed around
the performance measures of the BSC model and their
relationships, based on the literature and case studies
done in the field. Our approach included both face-to-
face and phone interviews in the first round and
communication via email in the second round. This
‘mixed-interaction’ approach is consistent with prior
studies (Okoli & Pawlowski, 2004; Ogden et al, 2005;
Nevo & Chan, 2007; Verkade et al, 2010; Nowack et al,
2011). Similar to our approach, Verkade et al (2010) used
interviews in the first round and surveys administered via
email in the second round (in a study of essential
elements of case management). In another study, as an
example of a mixed-interaction approach, Nevo & Chan
(2007) used email as the medium of communication first,
following up with telephone interviews in their Delphi
study to identify important functions and capabilities
that should be embedded in knowledge management
systems. Using multiple interactions, in no particular
order, is a commonly used and accepted practice in
Delphi studies.
The Delphi study was completed over a period of
four weeks. In the first round of our Delphi study, six
experts were interviewed over the phone and four
were interviewed in a face-to-face meeting. Face-to-face
interviews lasted about an hour and thirty minutes,
and phone interviews lasted about thirty minutes. The
same experts participated in the second round.
A summary of the first round results was sent to the
experts through email. Exchanging opinions via email
allowed the experts to access the report 24/7 in order
to express their opinions and was the most appropriate
way to communicate with our experts who were geo-
graphically dispersed. Feedback was received in this
round and final agreement was reached on the modified
summary. It is common for Delphi studies to reach
consensus after only two rounds (Melnyk et al, 2009;
Nowack et al, 2011). It is not surprising in this case
because all of the experts were from retail industry or
RFID consultants.
Next, we present the results of the Delphi study in two
parts. In the first part, the results confirm the perfor-
mance measures and the cause-and-effect relations in the
BSC model. The second part presents the divergence in
opinions among the experts.
Performance measures and cause-and-effect diagram
The expert panel’s viewpoints confirmed the perfor-
mance measures listed in Tables 1–3 as major ones that
can be used to quantify the impact of item-level RFID
on store operations. The causal relationships between
Narges Kasiri et al 261
performance measures within each perspective and across
different perspectives were derived from the retailing and
RFID literature and validated by the expert panel
(Figure 2). Causal relationships help managers observe
what is happening and why it is happening, allowing
them to make their decisions based on solid information
(Nikolaj & Malmi, 2005).
Next we explore how performance measures in supply
chain management, marketing, and merchandising
change the financial performance (Figure 2). We present
these in the form of propositions derived from this
Delphi study which can be further validated through
empirical studies. The financial performance measures in
our BSC model are ‘return on capital’ (Proposition 1), ‘lost
sales’ (Propositions 2a, 2b), ‘sales growth’ (Propositions 3a,
3b, 3c, 3d), and ‘implementation costs’.
Return on capital In the supply chain (store execution),
enhanced visibility decreases inventory inaccuracy
through better shrinkage management and consequently
lowers OOS, which decreases the forecasting error as well
(Kambil & Brooks, 2002; Delen et al, 2007; Zhou, 2009).
Thus, the safety level for stock can be decreased and
inventory records become more accurate (Szmerekovsky
et al, 2009). Reducing the inventory holding level
increases the ‘return on capital’ in financial performance
measures.
Proposition 1: Item-level RFID decreases inventory holdings,
which leads to an increase in return on
capital.
Lost sales RFID visibility in inventory control and
management, including visibility of items on shelves
and in inventory, also triggers changes in financial
performance indirectly through opportunities in the
store’s marketing and merchandising operations. For
example, a lower level of ‘lost sales’ is the result of more
product availability in merchandising operations pro-
vided by improved shrinkage management. A lower OOS
means more customers find their desired items which
increases store revenue.
In shrinkage management, every expert agreed that
RFID can reduce the effect of shoplifting by reducing
double losses. Better loss detection and loss prevention
makes it easier for managers to reduce OOS and as a
result, lower ‘lost sales’ (Alexander et al, 2002; DeHoratius
et al, 2005; Gruen & Corsten, 2008; Bai et al, 2009).
Proposition 2a: Item-level RFID reduces OOS in stores,
which results in a reduction in lost sales.
In return management, unique identification of items
with RFID tags prevents shoplifters from returning items
that were not sold and, consequently, decreases lost
income (Pearson, 2006; Lee & Ozer, 2007).
European Journal of Information Systems
262 BSC model for item-level RFID
Figure 2 Cause-and-effect diagram of RFID effects in retail operations.
Proposition 2b: Item-level RFID improves return manage-
ment, which leads to a reduction in lost
sales.
Sales growth Growth in sales is the result of four RFID-
enabled changes in store operations: a better variety/
assortment, better pricing management, better promo-
tion planning/execution, and faster/more convenient
shopping.
Better variety and assortment in merchandising is
obtained through the information the stores can collect
on customers’ shopping behavior as well as better
inventory management. Answers to questions such as
‘what items are searched for in smart carts and not
available on our shelves’ help retailers determine a more
desirable set of items to be carried. When product
assortments are based on customers’ desires, RFID
visibility again helps to provide both space and capital
to handle a wider variety of items (Helo & Zekely, 2005;
Rodkin & Yanahan, 2005; Szmerekovsky et al, 2009). Shelf
visibility helps to reduce the space needed to stock extra
items to allow for uncertain demand, and inventory
visibility frees both backstore/shelves space and capital
to be able to manage more variety in the store. A wider
European Journal of Information Systems
Narges Kasiri et al
assortment does not necessarily lead to higher sales in a
traditional setting because more variety makes inventory
management more complicated and results in higher
inventory inaccuracy as well (DeHoratius & Raman,
2008). However, item-level RFID visibility helps manage
the complication of wider variety/assortment and means
that customers are more likely to find the products they
are looking for, resulting in sales growth (Krafft &
Mantrala, 2006).
Proposition 3a: Item-level RFID allows the retailer to better
understand customer desires and stock
needed items, which results in an increase
in sales.
Managers can monitor their products on the shelves
or in the backstore through enhanced information
visibility in order to have less frequent and lighter
markdown prices (Aberdeen Group, 2008). A case study
by Kurt Salmon Associates shows that such lighter and
fewer markdowns increase revenue up to 5% (Kay, 2008).
More items are sold at full price or with a smaller
discount and, consequently, revenue increases.
Electronic price changes help retailers who have
promotions at different times during the day. Item-level
 BSC model for item-level RFID
RFID makes it much easier to offer such time-sensitive
promotions. Enhanced information visibility gives accu-
rate information on consumer behavior, helping mana-
gers to know when and where to implement partial
promotions. Additional benefits result from better
focused labor efforts and reduced errors when price
changes occur.
Proposition 3b: Item-level RFID improves pricing manage-
ment, which leads to an increase in the
revenue from sales.
From a marketing perspective, better customized and
storewide promotion planning makes sales growth
possible. In customized promotions, for example in the
Metro Extra Future Store, when shampoo bottles are
taken from the shelf, a commercial ad automatically
starts on the display screen above the shelf offering
bonuses with extra purchases related to that product
(Wilding & Delgado, 2004). Such customized bonuses are
offered before the customers check out ( Jones et al, 2004).
In storewide promotion planning and execution, the
visibility of promotional displays helps reduce OOS on
promotional items by on-time shelf replenishment and
helps guarantee that featured promotions are available as
long as the demand for them exists (EPC Global, 2008).
Proposition 3c: Item-level RFID improves promotion plan-
ning, which increases sales.
The intensive labor in cycle counting and inventory-
related tasks is no longer needed (American Apparel,
2009; Hardgrave, 2009a, b). Therefore, the staff has more
time to spend with customers to improve customer
service. Improving the customer’s shopping experience
by providing faster and more convenient shopping tools
(e.g., smart dressing rooms or smart carts) changes the
image of a store and consequently increases the number
of customers and sales (Berthiaume, 2004; Jones et al,
2005; Uhrich et al, 2008).
Proposition 3d: Item-level RFID improves the customer
shopping experience by helping customers
find their desired items faster and more
conveniently and, consequently, leads to
increases in sales.
Implementation costs Implementation cost is an impor-
tant financial performance indicator in the BSC model
(Figure 2). The cost of implementation has two categories:
one-time and recurring costs. A one-time or fixed cost is
associated with infrastructure expenses such as readers,
antennas, and software integration; and recurring costs
include the cost of tags, maintenance, and support (Doerr
et al, 2006; Bottani & Rizzi, 2008). The fixed cost of
different levels of RFID initiatives in inventory manage-
ment varies. In addition, the cost of implementing smart
Narges Kasiri et al 263
dressing rooms, smart carts, automatic check-outs, and
electronic signs and tags in marketing operations is signi-
ficant. The fixed cost varies from one option to another
based on the details of implementation.
Divergence of opinions
Although the experts’ opinions converged and confirmed
the performance measures and causalities in the BSC
model, they supported different degrees of strength in
the relationships. Interviewing our diverse group of retail
experts revealed that the retail environment is a major
factor affecting the magnitude of RFID-enabled changes
in retail operations. Factors such as customers’ and
managers’ attitudes towards this technology, the size of
the inventory (Proposition 4 below), and existing tech-
nology and practices (Propositions 5a, 5b below), for
example, determine the extent to which item-level RFID
can influence operations. Management, personnel, and
customer responses to this technology may be the most
important organizational key to achieving any RFID-
enabled changes in retail operations. Customer privacy
concerns and their willingness to use smart dressing
rooms, automatic check-outs, and smart carts influence
most of the benefits achieved through marketing and
merchandising (Roussos, 2006; Angeles, 2007).
The size of the backstore is one of the determinants of
the relative importance of BSC dimensions. In the
inventory management and control dimension, retailers
with large backstores suffer from inventory inaccuracy
that consequently leads to OOS and demand forecast
errors (DeHoratius et al, 2005; Gruen & Corsten, 2008; Bai
et al, 2009). Thus, an item-level RFID solution primarily
in the supply chain operation can lead to significant
improvements that small-backstore retailers may not
consider as important. Small-backstore retailers replenish
shelves directly when shipments are received from distri-
bution centers and do not encounter the same problems
or the magnitude of problems as a large-backstore retailer.
In addition, in such situations, shelf information visibi-
lity may not lead to faster shelf replenishments (because
there is no inventory in the backstore), and therefore,
there is no effect on variety and assortment management.
However, the experts’ opinions revealed that small-back-
store retailers are more concerned with the customized
promotions and advertising that can be achieved, for
example, by implementing smart dressing rooms/kiosks
in their marketing and merchandising operations. Thus,
the size of the backstore determines whether the supply
chain or marketing and merchandising have priority in
item-level implementation. This leads to the following:
Proposition 4: Prioritizing item-level RFID applications
depends on the size of backstore inventory.
Existing technology is another environmental factor
influencing RFID applications. For example, if EAS is not
currently used, then item-level RFID plays the role of
a surveillance technology. However, if traditional EASs
European Journal of Information Systems
264 BSC model for item-level RFID
are already used, RFID can coexist with them but might
not replace them. Some experts thought that current
EASs and RFID should work together. They believed that
by their size and visibility, current EASs are important in
order to deter shoplifters. Thus we propose:
Proposition 5a: Item-level RFID applications in stores
depend on stores’ existing technology.
Experts’ opinions on prioritizing RFID applications also
varied based on their current practices. In pricing
management, for example, some retailers with decentra-
lized pricing management such as Kmart currently use
half-day promotions in their pricing. Item-level RFID
makes it much easier to offer customers such time-
sensitive promotions. However, this benefit was not of
interest to retailers who have centralized pricing manage-
ment and promotion planning (Krafft & Mantrala, 2006).
This suggests the following proposition:
Proposition 5b: Item-level RFID applications in stores
depend on stores’ current practices.
The experts’ opinions show that contextual factors
determine the priority of each dimension in the BSC
model for retailers. In fact, various types of retailers may
focus on implementing item-level RFID in different
dimensions depending on industry factors such as the
size of inventory and their existing technology and
practices.
The model presented in Figure 2, and summarized
through Propositions 1–5, is a preliminary model devel-
oped by using building blocks from BSC methodologies
and system dynamics concepts, with initial validation
through the Delphi study of industry experts. It pre-
sents opportunities for a stream of research using various
methods such as case/pilot studies, analytical models,
simulation models, field tests, and field studies to
validate the propositions presented here. As described
in the development of the model, some studies have
already provided insight into a few of the propositions,
but much work remains to be done to assist decision
makers in making these sizable investment decisions.
Discussion and limitations
Item-level RFID investment in retail stores is in its infancy,
and guidelines for both researchers and practitioners are
needed to explore the opportunities that implementing
this technology offers. In this paper, we have introduced a
framework through a BSC model that is based on the
literature and is confirmed by a Delphi study. Using a
Delphi study distinguishes our model from other rela-
ted studies that are either analytical models (e.g., Gruen
et al, 2002; Atali et al, 2005; Delen et al, 2007; Heese,
2007; DeHoratius & Raman, 2008) or case studies (e.g.,
Loebbecke & Palmer, 2006; Hardgrave et al, 2008; Frederic
et al, 2009). Conducting a Delphi study as an exploratory
European Journal of Information Systems
Narges Kasiri et al
methodology not only reveals the points of agreement
among experts but also the areas of differences.
Our Delphi study shows consensus among experts in
the same direction as what already has been indicated in
the literature but in a more comprehensive way. Previous
studies have mostly focused on one dimension of retail
operations (either supply chain (e.g., Fleisch & Tellkamp,
2005), merchandising, or marketing (e.g., Jones et al,
2005)) while this study integrates all three dimensions. In
addition, previous studies mostly looked into a particular
type of retail industry, such as apparel (e.g., Frederic et al,
2009) or grocery (e.g., Hardgrave et al, 2008), whereas the
inputs by our diverse experts from various types of
national retail stores create more generalized results.
Results of the Delphi study also demonstrate the
sources of disagreements, which are helpful in prioriti-
zing various RFID applications in order to adapt them
to retailers’ needs. Our preliminary results reveal that
organizational factors such as existing technology and
practices, customers’ and employees’ attitudes, and the
type of inventory management change the priorities in
RFID investment and lead to different kinds of benefits.
In addition, this study frames the results of the case
studies into a BSC structure to make causal relation-
ships more transparent and organized. We have adopted
a bottom-up approach using a BSC model in which
RFID-enabled changes in floor operating processes are
evaluated and tracked in order to reveal their financial
costs and benefits (Lee & Ozer, 2007). Our model can help
evaluate how, on the one hand, item-level RFID can
help reduce OOS and inventory inaccuracy resulting in
increased sales and, on the other hand, how this tech-
nology can help improve the productivity of the labor
force, reduce avoidable mistakes such as check-out errors,
and help customers have a more convenient shopping
experience (Heim et al, 2009), all of which can change
the store’s image and potentially increase its market
share. Of course, not every retailer has the same needs
and interests. Some with large backstores and fast-
moving items may suffer from weaknesses and shortages
in inventory control and management, whereas others
are only concerned with making their marketing ope-
rations more efficient and effective. The results of this
study show that item-level RFID can play a role for a
variety of retail stores based on their needs. Prior to
any new investment decision, managers need to under-
stand the benefits of the investment that fit their needs
and then be able to plan and prioritize their implemen-
tation phases. Our BSC model and the set of propositions
assist managers in identifying the outcomes of imple-
menting such technology in addition to revealing the
relative importance of each dimension in managing retail
store operations.
This study integrates some relationships discussed in
retailing literature with the results of RFID exploratory
studies. For example, a more convenient and faster
shopping experience has been shown to improve customer
satisfaction and consequently increase the number of
 BSC model for item-level RFID
customers and, eventually, sales (Reicheld, 1996). RFID
studies, on the other hand, have shown that shopping is
faster and more convenient using some RFID tools such
as smart carts or smart dressing rooms (Frederic et al,
2009). The causal diagram in our BSC model combines
these two relationships to show that RFID tools result in
growth in sales. However, the magnitude and significance
of such causal relations need to be tested by field studies.
The major limitation in this study is that the full model
has not been empirically tested. The causations among
BSC performance keys formulated as the propositions are
currently validated only by the pilot studies and the
qualitative judgment of the 10 retail experts. Although
they present a systematic approach in viewing RFID-
enabled changes, more practical evidence for such cause-
and-effect relationships, particularly in the areas of
marketing and merchandising, need to be collected
through empirical and analytical modeling. Another
limitation of this study is the focus on retailers rather
than consumers. This study was developed to investigate
the benefits of RFID to retailers to help them make
investment decisions. We did not consider the consu-
mers’ point of view in development of the current model
or in the evaluation of the framework. The benefits to
consumers were discussed as long as they led to retailers
benefits, for example, faster and more convenient
shopping leading to more customers for the retailers.
Consumers’ benefits from this technology and behavioral
issues, such as privacy concerns and consumers tech-
nology acceptance, are important topics that should be
addressed before retailers can utilize this technology.
A more comprehensive framework that also embeds the
consumer’s perspective can be developed in the future.
Conclusion
The propositions based on the performance measures and
causal relationships were derived from available use cases
About the authors
Narges Kasiri is an Assistant Professor of Management
at the State University of New York, Oneonta. She
received her Ph.D. in Management Science and Infor-
mation Systems from Oklahoma State University. Before
her graduate studies, she completed a B.Sc. degree
in Computer Engineering at Sharif University of
Technology in Iran. She has published several articles
in both practitioner and academic journals. Her current
research interests are IT investment analysis and
analytical modeling of problems in information systems
and operations management areas.
Ramesh Sharda is Director of the Institute for Research
in Information Systems (IRIS), ConocoPhillips Chair of
Management of Technology, and a Regents Professor of
Narges Kasiri et al 265
as well as analytical models and were validated through
the Delphi study. A Delphi method to study RFID enabled
changes supplements existing literature that has included
mostly quantitative and empirical studies. The interest-
ing results of the model revealed that the benefits of RFID
go beyond supply chain operations. The Delphi results
indicated that while some retailers were enthusiastic
about item-level RFID applications in store execution of
the supply chain (inventory and shelf management),
others were more interested in, and expressed their views
on, the benefits of RFID in marketing and merchandising
operations. In addition, organizational factors play an
important role and determine the extent to which item-
level RFID influences different retail operation categories.
The proposed BSC model is a comprehensive frame-
work to help both researchers and practitioners who are
contemplating the use of RFID in retailing. To research-
ers, the model can serve as a research agenda that
contains a set of propositions about cause-and-effect
relationships that all need to be tested, validated, and
quantified. For instance, research questions such as ‘how
can item-level tools such as smart carts make customer
shopping faster and more convenient and at the same
time improve store operations such as customer service?’
are extremely important in a quantitative cost-benefit
analysis of item-level investments. Many similar impor-
tant research questions arise from the causal relations
described in the proposed BSC model. Answers to such
questions can also help determine the target values for
different performance measures used in the BSC model.
For practitioners, on the other hand, who are challenged
with investment decisions in this area, the model can
serve as a guideline to identify the benefit areas of
implementing this technology in retail operations. The
model can help them determine the relative importance
of various aspects of RFID utilization and conduct more
use case studies to quantify those benefits.
Management Science and Information Systems in
the Spears School of Business at Oklahoma State Uni-
versity. His research has been published in major journals
in management science and information systems includ-
ing Management Science, Information Systems Research,
Decision Support Systems, Interfaces, INFORMS Journal on
Computing, Computers and Operations Research, and many
others. His coauthored text book (Decision Support
and Business Intelligence Systems by Turban/Sharda/Delen,
9th edn, Prentice Hall) has just been released. He
serves on the editorial boards of journals such as the
INFORMS Journal on Computing, Decision Support Systems,
Information Systems Frontiers, and OR/MS Today. He is also
a cofounder of a company that produces virtual trade
fairs, iTradeFair.com.
European Journal of Information Systems
266 BSC model for item-level RFID
Bill Hardgrave is Dean and Wells Fargo Professor,
College of Business, Auburn University. Dr. Hardgrave
is the founder of the RFID Research Center at the
University of Arkansas and continues to work with a
variety of companies on RFID-related projects, primarily
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