Nordstrom Strikes RFID Chord

October 30, 2012 Bill Colleran

A word cloud which shows how Nordstrom could benefit from RFID and gain business intelligence, inventory management, improved shopper experience and more.

I was struck by some comments made by Jamie Nordstrom, president of Nordstrom Direct, at the recent Shop.org event describing Nordstrom’s strategic initiatives to improve customer service:

  • Create seamless experiences for customers both online and in-store
  • Increase investment in physical stores
  • Increase speed of shipping
  • Offer complete visibility of in-store inventory online
  • Create a customized environment for shoppers in stores

Major retailers are deploying in-store RFID for all of these reasons. And while there’s been a lot of press about RFID bringing on-shelf visibility to retailers like Macy’s, Bloomingdales, JC Penney and Walmart, rarely do the lines get drawn back to the key business strategies addressed by RFID.

According to the National Retail Federation, online holiday retail sales are growing at 15% annually while brick & mortar sales are only growing at 2.8%. Brick & mortar retailers are also feeling the impact from “showrooming” — customers’ practice of browsing in a physical store only to purchase later online or of actually price comparison shopping with online sites while in a physical store. To address the online threat, brick & mortar retailers must leverage their distributed geographical footprint as a competitive advantage. Some will employ tactics such as in-store pick up or same-day delivery, as Nordstrom has, to entice and please customers. Brick & mortar retailers benefit from 10s or 100s of locations with inventory that can serve shoppers both in-store and online, but inventory data must be accurate and near real-time to deliver the promise of this approach to online customers. Simple, cost-effective tools to track and locate inventory are imperative for brick & mortar retailers to combat the threat from online-only retailers. RFID is a big part of the answer here.

By RFID-tagging individual apparel items and providing store associates with handheld RFID readers, retailers can generate valuable, actionable data to drive sales. Enhanced sales can more than pay for the RFID tags (a few cents per item) and handheld readers (only a few are needed per store). RFID systems can determine accurate inventory levels and help locate items in stores. This complete inventory visibility can provide the benefits Nordstrom is looking to bring its customers—a seamless experience both online and in-store along with faster delivery speeds.

Retailers invest over $16 billion annually in business intelligence technology, secret shopping, customer loyalty, consumer tracking and other in-store data gathering initiatives to make brick and mortar stores more effective, efficient and profitable. Many retailers don’t realize that they could generate this same business benefit by deploying RFID in stores. One technology, so much information … and so many benefits.

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