Tuesday, May 7, 2013

Can RFID help physical stores in survival?

It looks like physical stores still form the majority chunk of the retail, but are growing very slowly and are struggling to compete with online stores.

Online stores aka e-commerce players are equipped with huge ammunition of customer knowledge as compared to the physical stores. Physical stores enjoy the intimacy and personal relationships with customers which e-commerce players do not. The way e-commerce players can track the consumer behavior on their site, physical store can not. And if physical stores decide to do something similar, it will become absolutely intrusive, driving the customers away from the store.

For the uninitiated ones, the e-commerce site keeps on tracking every click that you make on their site, thereby collecting huge data. This is completely transparent to the visitor and hence is not at all intrusive. Now imagine what would a physical store need to do to track its cusomters' behavior? Install CC TV cameras all across the store? Send one of your staff members along with every customer? Or give a google glass to every customer? Not possible, right? All these mechanisms will drive the customers away for the fear of loss of privacy. Is there a better way for these stores?

Probably RFID could be of help. What if every customer is handed over a bag at the entrance or a simple tag, which she needs to carry it through out the presence in the store and return it at the billing counter? RFID could be tracked through various RFID readers installed across the store, which could be hidden from customers' eyes. When the tag is returned, it could be mapped to the bill generated, if the person purchases something. Even otherwise, it could give you the path taken by the customer in your store and possibly could also tell you the time spent in each section. 

Not sure if there are portable, miniature sized RFID readers, if yes, then this concept could be taken a step further. The customers could be equipped with the RFID tag + reader. Now when the customer picks up any item (item is expected to be RFID tagged), the on-person-reader detects the picked up item and records it.

This will enable the physical stores with very valuable data such as:

  • Most common path taken by the consumers
  • Which products get picked up by the consumers?
  • What is the conversion rate once the product is picked up by the consumer?
  • What are the areas where consumers spend more time?
In the article "To Catch Up With E-tail, Tools to Track Shoppers in the Store" it mentions tools like Video surveillance and the data mining of the videos captured. But I believe the RFID could be way better since it maintains the anonymity until you actually make a purchase and is completely transparent to the consumer.