It's great when retailers bring new technology innovations to the market. It's even pretty good when they adapt not-so-new innovations to their processes in ways that help customers and/or the bottom line. What isn't so great is taking credit for a technology that's been around for a while — presumably because it makes for a better news release than saying, "We're finally adopting a technology that's been around for a few decades. Yay us!"
Consider a May 19 blog post from Keri Jones, Target's executive vice president for global supply chain and operations. Jones, who had been touting how well the chain's mobile apps were doing, took a detour to say that not all innovations happen in mobile, nor are they necessarily customer-facing. True. Then she went for the whopper: "Developing the kinds of behind-the-scenes technologies that quietly help Target stay ahead of guests’ changing behaviors can be the most exciting. Technologies like Radio Frequency Identification (RFID) — which I’m thrilled to announce Target will roll out later this year."
Yes, developing RFID would indeed be exciting for Target in 2015, had Charles Walton not patented RFID back in 1983. (Wikipedia, that maestro of real-sounding rumors, puts RFID's roots back to the mid-1940s.) For what it's worth, RFID has been a key retail technology for more than 15 years, with Target nemesis Walmart taking the retail lead at one early point.
Let's delve into what Jones promised. "We’re now working with key vendors on a fast-tracked timeline to begin inserting a smart label on price tags that will help Target improve our inventory accuracy and enhance our ability to keep stores in stock," Jones wrote. "This unobtrusive but significant technology will increase efficiencies by providing greater visibility into our inventory. That means guests will better be able to find out whether we’ve got the item at their Target store or at others nearby. We also expect RFID to help us better fulfill online orders placed for store pickup, which already account for 15 percent of Target.com purchases. Our RFID rollout will start in a small number of stores late this year, then expand to all Target stores in 2016. The program will include many of our key categories like Women’s, Baby and Kids’ apparel and home décor — making this one of the largest RFID projects in retail."
Jones' next line was particularly important: "My team and I are thrilled about technology’s considerable role in upping Target’s operations and, in particular, bringing near-complete store inventory accuracy within reach for the first time with RFID."
Near-complete is exactly right. This is an item-level RFID effort, which means that inventory leveraging that data will suffer the same fate as all inventory systems. If a product is shoplifted or, more frequently, falls behind some equipment, the system will think it's on the shelf. More precisely, the online storewide system will think that, and that's what the mobile and Web sites will say.
The advantage of item-level RFID is that if a store associate, with the proper equipment, goes searching for the item, it should be findable no matter where it is in the store.
The statement doesn't say whether these are active or passive tags, but given the way this is phrased, it seems almost certain that they'll all be passive. (We reached out to Target for clarifications and Target did not respond.) That's a shame because active RFID tags equipped with temperature sensors and the ability to record a history of temperature readings could be a huge help when trucks deliver pallets of perishable refrigerated or frozen foods.
Imagine a manager doing a quick scan of all of the active tags and glancing at a readout on his iPad. "Hey, these 10 pallets in the back exceeded acceptable temperatures for nine hours two days ago. Did your refrigeration kick out or something? They may be ice cold right now, but I am rejecting them. I have no interest in selling spoiled food. And this ice cream had to completely melt and then refeeze. That's going to have degraded quality. I'm rejecting that, too."
But active-level tags are generally still far too expensive for such efforts. It's still a nice goal for some day.
Getting back to that "near-complete" comment, the most frustrating problem with using item-level RFID to track available inventory for mobile and online sales purposes is the supply chain in-store black hole. This is a trivial issue much of the year but a huge problem during ultra-hectic periods, such as mid-to-late December or during one of Target's ultra-publicized sales. In other words, the black-hole problem exists precisely when accurate inventory ("Before I drive to the store, do you have any of this item left? If so, can you please set one aside for me?") is crucial.
Here's how the black hole happens. The system knows how many items were received and it subtracts the number that were sold and assumes that the result is the number of items available to be sold. But aside from the already discussed theft and "items falling behind something," what about items that are in shoppers' carts? They are indeed no longer available for sale, but they have yet to be paid for. In short, a customer hitting the site and being told that there are two left — and potentially even two set aside — might be in for a surprise upon arrival.
The best use for item-level RFID is not for online and mobile inventory, although that is a nice touch. The game-changer functionality is marrying it to the app for in-store product tracking.
Let's say a shopper is looking for a very specific flavor and type of cereal and the store inventory says it's there but the shelf says it's not. Instead of relying on the store planogram — which doesn't say where an item is as much as it says where it is supposed to be — it can wirelessly track the tag.
That means that if the lemon-flavored box of shredded wheat (frighteningly, that probably exists somewhere) was misplaced by another shopper and left in the cleaning supplies aisle, the app will zero in on it. And, in theory, not merely zero in on the aisle, but the shelf (by knowing the item's positioning) and even if it's behind other products. Think of it as a mobile Geiger counter for misplaced products.
Knowing Target, the initial deployment will simply hit the low-hanging fruit, which amounts to better — but far from perfect — in-store inventory. But it's a step in the right direction.