Why Walmart is adopting RFID

The application of RFID deeper into retail operations than case or pallet-level tracking is not really an Asset Protection driven proposal. The ability to better track SKU level items, smooth out merchandise flow, and prevent out-of-stocks while eliminating non-productive, profit-draining overstock situations is a main tenant of retail. The better Walmart, or anyone can get at doing that, the more control they have in their merchandise investment and the more profit can be squeezed from each dollar invested. With improved profit to investment ratios along with cost-controlling measures such as improved productivity for store level associates, a company can use the gain to pass on in savings to their customers, which is the real secret to success.

Asset protection will benefit from the improved operations as well. Shrink is unaccounted for invested dollars. A retailer invests in merchandise to sell and somewhere along the trail from factory to store it is lost, sometimes physically, sometimes in the handling and accounting process. The ability to quickly verify actual quantities of items in a store not only enables the retailer to replenish the stock at the right rate of sale, it also eliminates countless hours of searching for the products in backrooms, overstock boxes, risers and any number of other places merchandise finds to hide in a store. When the count is exact as the product is received, matches the invoice with precision, and is then accurately tracked until it is sold, shrink can theoretically become just a bad memory.

There is still theft to consider, however RFID offers some improvements in that respect as well. The key is real-time knowledge of the status of key merchandise. Associates can react to missing one item, instead of hundreds or thousands of dollars worth, before they know there is a problem. Concerns have been expressed over privacy and tags could be used to identify concealed items, but that is not the path to success. If you wait to react to a theft, you still must deal with the situation and there are several pitfalls in apprehending shoplifters and processing internal theft situations. So the bottom line is that it is about immediately identifying loss and taking active measures to prevent further loss.

To those expressing concern over the proliferation of technology like RFID in retail, the challenge is to keep the concerns on a productive level. Retailers are not motivated by big brother-like intentions. They are striving to become as efficient as possible in their operation to shave off every non-productive penny invested. It is how they can beat their competition in pricing giving the consumer the benefit of lower prices and the shareholders the benefit of improved profits. There are real concerns relative to unintended consequences of the misuse of technology. Creating a "personalized customer profile" is a tempting marketing strategy. Imagine knowing exactly what every customer who comes in the doors wants to buy, maybe even before they do. Questions of privacy must be addressed openly and a retailer must make efforts to prevent the misuse of data. This new era is where the professional retail LP leader can make a significant contribution.

One day, cash registers may be obsolete. Currency could be exchanged virtually and attached directly to people through some kind of biometric authorization. The role of the LP professional will look much different when that day arrives. Getting from where we are to that point will be an interesting ride.

About the author: Eric White serves as director of retail strategy for Wren, providers of physical security solutions used by some of the world's most innovative and respected retailers including Walmart, The Home Depot and Target. White has 20 years of experience in loss prevention, asset protection and physical security, having served at Walmart and The Home Depot. He has been awarded Diplomate status for innovative work and leadership in the Private Sector and serves on the board of directors for the American Board for Certification in Homeland Security (ABCHS). White can be reached at eric.white@wrensolutions.com. You can find more of Eric White's commentary at Wren Solutions' LPXtra Blog.