Issue #183 | Friday the 13th, 2009 | by Andy Kowl

Office supply retailer Staples recently announced success with item level RFID in Canada, where they tag the more expensive items for sale. Our friends at Reva Systems installed an RFID internal distribution system managed by their TAP Processor, for Manor, an upscale Swiss retailer with 70 stores, who was happy enough with the results they adding RFID to their remaining 70 stores.

With these and other retail success stories, we wondered how Best Buy was doing exactly two year after they declared RFID as their future. In 2007, they began to move from RFID pilots to some RFID mandates to their suppliers. It was suggested we run a reminder of the original story, which is still one of the more dynamic retail uses of RFID in the U.S. It's a story of a large chain that is not Walmart; high value items; and a good variety of in-store RFID usage.

At RFID World in Dallas that year, the then $30 billion retail chain (sales) announced that in the original test stores, each increased revenues on average by 18.7% at higher margins, It sounded pretty good for any retailer.

“RFID may not be the best thing since sliced bread, but close” said Robert Willett, CEO of Best Buy International. He reported, “Tests are meeting, or exceeding, expectations. . . RFID has arrived. It is definitely going to happen.

“We think we are at a breakthrough point. We’d love to RFID every store,” Mr. Willett added, then the first prominent figure using RFID as a verb in a public forum. Like faxing and emailing, when the name of your technology becomes a verb, it's institutional.

We tried to update Best Buy's current thoughts on the matter, but were unable to reach anybody by press time who would go on record. A review of the stories since then showed in late 2007 the retailer join with Walmart in an initiative by EPC Global on tagging DVDs; and there were reports by analyst Baird in 2008 Best Buy was continuing their deployment of RFID. Currently, IT providers still service CPG manufacturers who must "meet Best Buy compliance" requirements.

From supply chain to customer service
Best Buy began looking at RFID for supply chain purposes, like most other retailers. They then realized supply chain savings were just the tip of the iceberg. They believe the larger benefits come from making life simpler for customers and allowing “the Blue Shirts,” their ubiquitous Best Buy sales staff, to “have more fun” rather than searching the backrooms. The company looks to their sales staff as being the key to their future growth. They “invest massively” in them.

Data then showed one third of visits by consumers to a typical Best Buy result in no transaction. “We are absolutely paranoid about the customer experience,” Willett revealed. “We believe we can take the chore out of shopping. . . with RFID” in a combination of uses, including receiving, 100% realtime inventory, displays, smart signs and most of all: checkout. “The first store to remove checkout lines will be the champion of the community.” As one who has abandoned his purchase at least twice due to long Best Buy checkout lines here in the Washington, D.C. area, this writer can attest to their lost sales.

Scanning every video game title in the store takes 45 minutes. In the pilot stores, it is instant. That means 45 minutes more of their most critical investment, the highly trained, blue shirted sales consultant, is spent working with customers. Also, when a customer asks for a product the system says is in the store, the Blue Shirt says, “‘Yes we have one,’ and then spends 10-15 minutes rummaging around.” The result? Frustrated customer – and employee.

From customer service to increased sales
Best Buy pilots showed them RFID could “unleash the power of our people in the stores.” The number of customers not finding what they want was cut by 40%. The number of units sold increased by 14.1%.

The international retailer expects their service group, Geek Squad, which provides tech support to small businesses and consumers, to gain benefits from RFID as well. The retailer sees the ultimate answer in the concept of “co-creation” where sales associates and Geek Squad members work with customers in a retail version of self authoring. As this approach is developed and refined, Best Buy leadership is convinced RFID is a key to providing the seamless communication necessary to achieve their customer service panacea.

Best Buy has been pacing themselves due to the costs of implementation on such a wide scale basis, and prices have continued to fall as they roll out. The CEO said that, as an industry, “We have not done a good job of communicating benefits to the consumer.” He pointed out the privacy fears are unfounded and the message is not getting out widely enough.

“Above all, we’re learning,” said Robert Willet. “You have to be participating to be learning.”

Going forward with RFID
It is this use of RFID, as the catalyst for the if-you-can-dream-it-you-can-do-it attitude we continually see that makes the technology’s potential thrilling. Time and again, by opening their imagination without preconceived restrictions, huge new benefits are discovered by RFID pioneers.

The state of the economy does not change these facts. It does, however, clearly slow down the ability for far-sighted business leaders to see far enough ahead to be sure what to do today. Once we all readjust to the new realities, increased savings and revenue along the lines Best Buy experiences must win the day.