It is widely known that item-level RFID saves serious labor time, decreasing costs and overhead. The technology enables the most rapid and accurate counting possible—100’s of times faster than barcodes or manual counting. At a read rate of 100s of items per second, counting and auditing tasks that once required multiple people and took many hours to perform can be handled now by a single person in a fraction of the time. 
With the Obama administration pushing a nation-wide wage hike that elevates the minimum wage to $10.10 an hour, the business case for RFID’s labor saving capabilities cannot be ignored.
Recently, I spoke with a New York retailer who plans to deploy RFID specifically to mitigate the impact of minimum wage increases on his business bottom line. The math on this is pretty simple: $10.10 per hour represents a 25% boost to the current hourly minimum of $7.25. For one hourly employee, this adds $124.40 to the retailer’s weekly cash outflow, and almost $500 monthly. Multiply the upswing in labor costs by 5, 10, 20, 100 employees or more and—you get the picture. Once the $10.10 minimum is established, the government plan calls for continued increases of from 1% to 2% each year going forward.
According to the National Retail Federation (NRA) these changes to the minimum wage place a new burden on employers already struggling to stay afloat in this uncertain economy. As the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans—retail is important to the overall health of our national economy.
While labor costs are about to start moving upward, retail sales are staying flat or showing only slight advances. January retail sales figures released by the U.S. Census Bureau show sales decreased 0.4 percent, seasonally adjusted month-to-month.
With sales leveling out at a time when labor expenses are set to rise, it makes perfect sense for this New York retailer, and every other retailer who wants to keep their labor costs down, to leverage RFID to minimize the “bleed.” The logic train for my New York retailer friend followed this track: Currently, he employs three people to conduct perpetual inventory counts in his stockroom. Using barcode technology, they can count about 260 items per hour each, or just under 800 items per hour total. Using a hand-held RFID reader, the three employees can count up to 20,000 items an hour total, and with a higher degree of accuracy: 95-99+ % accuracy.
The retailer states that with RFID, one person can manage his back stock inventory counts, and do it more accurately. He can operate more efficiently with fewer employees, and so can cut back on hiring and move employees out of the stock room, sending them home or utilizing them in ways that pump up sales and customer service. The increased efficiencies will show up on his bottom line, and accelerate his ROI for the RFID deployment, which by the way, he plans to execute in the Cloud.
In addition to cutting hourly labor expense directly, RFID saves the cost of training new personnel in the store’s inventory processes. And there are always new personnel to train. The retail industry has one of the highest rates of employee turnover of any industry, and that high rate is on the rise. According to Kenexa IBM Smart Workforce, the average turnover for hourly workers was 22% in 2012. For part time associates, the rate is 67% with the average cost of advertising for, interviewing, hiring and training each new employee estimated at $2,549.
It makes sense that when costs rise in one area, such as labor via the minimum wage, business owners aggressively seek to implement cost saving strategies wherever they can to maintain profit margins. Here’s where RFID shines, showing its strength as a strategic, if not, essential business tool for 2014 and beyond. By ensuring that all inventory is accurate, and giving retailers a clear, undistorted view of inventory at all times, RFID makes it easy for any retailer to maintain a “perfect” sales floor, even during seasonal changeovers and busy sales periods.
With inventory in balance and fewer customer transactions lost to Out-of-Stocks, most retailers can expect to see a sales lift of 2% to 15%. RFID also helps the bottom line by eliminating human error from processes, and minimizing employee theft—a critical problem in high turnover industries.
As an enabling technology, RFID streamlines all processes related to inventory and its management. The right RFID system can minimize the time required to train new employees in the correct inventory procedures for the retailer’s business model. Our experience proves that anyone, from teenaged part-timers to non-techy old timers, can learn to use Truecount’s Hand-held RFID solution in just a few hours or less— with very little, if any, demand on the retailer’s IT teams. We have worked hard to keep our solutions as easy to implement and as intuitive to use as a video game or an App for your iPhone.
Right now, the economic outlook for 2014 remains cautious. Kiplinger’s reports that consumer spending and consumer confidence are still below normal. Both will have to improve to create retail momentum. While the industry is waiting for this to happen, many retailers are still saying they want to “wait and see” before implementing RFID. Not my New York retailer! He sees the wisdom of moving ahead in order to begin accruing the benefits—and savings—of RFID now. What about you?