The Benefits of RFID Every Retailer Should Know

All Articles, Knowledge Hub

By Doug Todd

In an evolving omni-channel retail landscape, maintaining impeccable inventory management is a cornerstone of profitability and customer satisfaction.

Consumer expectations are constantly rising and as competition intensifies, retailers worldwide are in a continuous cycle of process improvement – seeking solutions to streamline operations and enhance shopping experiences.

RFID (Radio Frequency Identification) is one solution that has gained traction quickly within the retail sector in recent years. RFID inventory systems are not a new technology, but as our supply chains increasingly demand accuracy to meet fulfilment targets, RFID has undergone a renaissance. Increasingly retail stores are turning to RFID for its ease, increasing cost efficiency and pinpoint accuracy.

In 2023, global retailers are harnessing the capabilities of RFID, and in turn the technology is creating operational breakthroughs for those companies exploiting it’s potential. Just as AI is rapidly revolutionizing the way we work, executives across all functions of a business need to have a strong understanding of RFID to prepare for the future of retail.

In this article we’re going to look at five advantages of RFID inventory systems that we believe are changing the game, and consider how they might help you to grow your business.


Understanding RFID in Retail

Before we delve into its benefits, let’s briefly understand how RFID technology works in the realm of retail. RFID involves the use of tags containing microchips, and antennas which transmit data via radio waves to RFID readers. These readers capture the tag information and communicate it to a central system, enabling real-time tracking and management of inventory items.

Unlike traditional barcode systems that require line-of-sight scanning, RFID tags can be read from a distance and even through obstacles (such as inside boxes), enhancing efficiency and accuracy. This enables large amounts of inventory to be scanned and recorded in bulk instantaneously, transforming the way we manage stock across the entire supply chain and allowing labour to be redeployed to more strategic tasks within a store, distribution centre, or factory.


What are the Benefits of RFID Technology for Your Retail Business?

RFID systems impact businesses on three primary levels – inventory management, store operations, and customer service. Falling out of these areas are a raft of benefits that improve retail businesses delivery and efficiency overall; here we discuss the five that in our experience are the most impactful on a business’s bottom line.

1. Enhanced Inventory Accuracy Delivering Higher Sales

Inaccurate inventory records can lead to out-of-stock items, overstocking, and operational inefficiencies such as missing products. RFID technology brings a new level of precision to inventory management.

As retailers, we typically overestimate our inventory accuracy. Studies published in the International Journal of Production Economics find that in 65% of cases, inventory records did not match the physical stock in stores. Work by McKinsey has shown that RFID systems typically offer an average 25% increase in inventory accuracy, as compared to traditional barcode systems1.

This remarkable accuracy drastically reduces costly human errors and empowers retailers to make informed decisions based on real-time data and accurate inventory levels.

The result? Improved order fulfilment, optimized stocking levels, and minimized supply chain disruptions. Most importantly, these efficiencies typically deliver between 1-3.5% increases in sell-through of full priced items, simply by ensuring the right items are available, in the right place, at the right time.

2. Efficient and Quick Stock Counts

The tedious process of manual stock counting is both time-consuming and prone to errors. With RFID inventory systems, retailers can bid farewell to the days of arduous stocktaking and manually receipting deliveries. Cycle counts become a simple task that most RFID capable retailers will carry out daily.

A report by the Harvard Business Review reveals that a typical inventory count that previously took an average of eight hours with traditional methods can now be completed in just 30 minutes using RFID technology2. This efficiency not only saves valuable staff time but also enables retailers to redirect resources toward more strategic tasks, ultimately enhancing productivity.

3. Omnichannel Excellence

The modern retail landscape demands a seamless omnichannel experience for consumers. RFID technology enables retailers to accurately track inventory right across their supply chain, ensuring accurate availability for both online and offline shoppers. McKinsey reports that companies adopting RFID for omnichannel operations experience a 10-15% increase in online sales and a 5-10% reduction in out-of-stock items. This holistic approach to inventory management not only drives sales growth but also cultivates stronger customer loyalty through consistent, reliable service and product availability.

4. Loss Prevention and Shrinkage Reduction

Retail shrinkage, driven by theft, errors and fraud, poses a significant threat to a retailer’s profitability. RFID inventory systems act as a potent deterrent against loss, particularly internal theft. In 2022, National Retail Federation (USA) estimated total annual losses across the retail sector due to shrinkage alone at over $95 billion each year3. By leveraging RFID retailers witness an average 40% reduction in out-of-stock items and a 33% reduction in shrinkage4.
The ability to swiftly identify discrepancies and potential theft incidents equips retailers with the tools needed to combat shrinkage effectively – building topline sales and safeguarding their bottom line.

5. Improved Customer Experience

Today’s consumers expect exceptional service, making a positive customer experience a non-negotiable aspect of retail success – be it online, or in-store.

RFID technology contributes to this by ensuring products are available when and where customers want them, that store staff have the time to attend to their needs, and the checkout process is swift and efficient.

According to the British Retail Commission, a staggering 79% of shoppers won’t wait more than 5 minutes in a queue, stating “all the effort that goes into getting customers through the door and ready to part with their money can be lost by the sight of a lengthy queue”5. RFID mitigates scenarios like these, improving the efficiency of traffic movement through the store. That directly translates into heightened customer satisfaction and increased loyalty.


The adoption of RFID inventory systems marks a pivotal turning point in the retail industry’s journey toward efficiency, accuracy, and customer-centricity. From precision inventory management and swift stock counts to optimised omnichannel operations and effective loss prevention, the benefits are abundant and quantifiable. Retailers cannot afford to overlook the transformative potential of RFID technology, especially in an environment where adaptability is synonymous with success.

As you navigate the intricacies of modern retail, keep in mind that RFID isn’t just an investment in technology; it’s an investment in your future relevance and growth. So, whether you’re a large-scale retailer or a boutique business, RFID inventory systems have the power to elevate your operations, enrich customer interactions, and position your brand as a trailblazer in the dynamic world of retail.


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