Holiday Retail Sales - and RFID

Filed in archive Retail on December 6, 2005

Staying with my theme about the U.S. holidays for just one more post, let me point you to an important article about RFID in the retail setting, in the publication Line 56, called "RFID Intelligence."

Best Buy, one of America's "big box" retailers, conducted a store pilot this past summer using RFID on individual items in the store. Best Buy concluded that the biggest benefits from RFID will come from tagging items in stores, not just from tagging cases and pallets arriving in the warehouse. The Line 56 article notes:

"...Paul Freeman, RFID Program Director for Best Buy, explained how radio frequency identification translates into more intelligent business decisions that in turn translate into revenue. 'We did a complete business case and the majority of benefits come when we do things based on the information on a tag on the store Floor,' Freeman says.

For example, Best Buy used technology from vendor Vue Technology in a store pilot conducted this past summer and designed to demonstrate the benefits of item-level RFID. Best Buy tagged its hundreds of video game titles with RFID in order to meet several objectives. 'We want to make sure that, of all the game titles physically in the store, we have at least one of each title on the floor,' says Freeman. 'It's very manually intensive to write down titles on paper, go the back room, and find titles in the storage bin that don't match the list.'

Vue's technology allows Best Buy's employees to run reports that let them know not just what new titles have been brought in on a given morning, but that current titles on the floor may be running low and need to be replenished from the storage room."

Now why is it so important for a retailer like Best Buy to know if something is in stock immediately? Well, U.S. retailers can earn upwards of one third of their entire sales for the year during the last five weeks of the year (the so-called U.S. Holiday season).

And shoppers in the U.S. have a lot of choice of stores, especially in major metropolitan areas. If a hot item is not in stock -- or if the sales clerk cannot tell whether more items are waiting in the back to be stocked on shelves -- shoppers will just go next door to another big box store. Or they will go online and find something over the Internet.