How retailers are deploying in-store technology

In recent years, for a variety of reasons — operational changes, challenges in hiring and corporate expense cuts — some retail stores are noticeably light on staff.

Since the height of the pandemic, store operations have grown more complex, as omnichannel services like online fulfillment, pickup and delivery have become entrenched. Hiring in many areas is tougher, as wages have risen and unemployment has fallen. And some retailers, facing threats to margins and profits, have slashed their expenses, including their workforces, often replacing humans with tech.

“A lot of stores run on much thinner staffing than they used to. Generally, there has been a reduction in headcount and labor hours,” GlobalData Managing Director Neil Saunders said by email. “Macy’s is a good example of this, as there are around 18% fewer staff per store than in 2019.”

It’s not just Macy’s. Employment across the sector is down and expected to decline further, according to the U.S. Bureau of Labor Statistics: As of March 2024, retail unemployment was 5.1%, compared to 3.8% overall. In the next decade or so, the industry is set to lose nearly 77,000 workers, a 2% decline, compared to an expectation for 3% growth across all industries.

But running a store with a leaner staff is usually a mistake, and many retailers should beef up instead, even as they embrace new technologies for tasks previously done by humans, experts warn. For example, more than 40% of respondents to a survey by Theatro, which supplies communication tech for frontline workers, said that shopping in stores is “less enjoyable” than before the pandemic, and 60% of them blamed inadequate staffing levels.  

Store staffing “is an easy area to cut as it has a very visible positive impact on the bottom line — the problem is that it causes a lot of invisible issues which negatively impact things like staff morale and customer satisfaction,” Saunders said. “Ultimately, this can harm the top line.”

The tech vs humans fallacy

As the world anticipates the implications of artificial intelligence across society, retail executives are already making plans to invest in AI. Machine learning, AI-enabled technologies and older tech like RFID are helping retailers speed up and refine tasks like inventory management, pricing and theft-detection that are slower and less accurate when left to humans alone.

Then there is self-checkout, probably the most visible example of how stores have expanded their use of technology — the machines have become the dominant checkout format in grocery and have shown up at discounters, mass retailers and apparel retailers. But they’re also a good example of how humans aren’t easily replaced by technology, a lesson some companies, including Five Below and Target, have learned the hard way.

Consumers do appreciate self-service options, but have higher expectations around customer service since the pandemic, according to research from Theatro and Customer Management Practice, a research and advisory firm specializing in customer experience. Retailers that invest in those options without regard to how it affects their customers “will in fact see short-term gains, but end up with a pretty massive problem on their hands,” Customer Management Practice President Mario Matulich said by video conference.

“Our research has shown us that there’s a major misalignment in terms of what customer expectations are when it comes to the self-service experience and what brands and organizations are actually delivering,” he said.

There are often complications in deploying any technology, but especially when it’s designed for use by customers, according to Nikki Baird, vice president of strategy at Aptos Retail.

“If something goes wrong with the technology that's oriented for the consumer, then who do they turn to for help?” she said by video conference. “They turn to the store employee, so it becomes the employee’s problem anyway. Have you really made anybody's life better in those situations?”

Still, many store workers embrace technology, she also said, citing a Scandit study that found 40% of retail staff say their employers neglect their tech needs and about a quarter include tedious tasks and frustrating technology as a reason to leave their jobs. Bottom line, though, it’s a misunderstanding that AI and other tech means that stores can hire fewer workers, according to Jason Souloglou, CEO at SeeChange Technologies, which helps retailers improve efficiency and combat shrink.

Tractor Supply is one example of a retailer that has embraced AI to foster customer service, using it to alert store associates when lines are too long or help customers get information, CEO Hal Lawton said at the National Retail Federation’s Big Show in 2024.

“AI frees up employees to conduct higher-value tasks and explore new growth opportunities by utilizing their creative, critical thinking and problem-solving skills,” Souloglou said by email.

Fewer workers, more problems

In 2022, unit labor costs (the total labor costs required to produce a unit of output), rose in retail overall, with annual productivity down for the first time since 2008, according to data from the Bureau of Labor Statistics. Most segments covered by Retail Dive, however, saw productivity gains, according to that report.

Meanwhile, retail work is now more elaborate, notes GlobalData’s Saunders.

“Activities like picking online orders, delivering curbside, and manning collection desks have absorbed many more hours,” he said. “In the case of stores like Walgreens and Target, having more items locked away is another burden on store staff. In a lot of cases this has created a labor crunch.”

Store labor costs loom large on the bottom line, and therefore are a perennial target for cuts, according to Lee Peterson, executive vice president of thought leadership and marketing at WD Partners, who has had a long career in retail, starting with working at and managing stores.

“Since my inception in retail, the first number that gets cut, no matter what everybody says, is the payroll number,” he said by phone. “It’s like ‘Do we really need 100 people stocking the stores? Let’s make it 75 and see what happens.’ You can cut that number today, it's just easy to do, effective immediately. And it’s a huge, huge mistake.”

Years ago, as a store manager running one retailer’s most productive location, Peterson got the call.

“I remember running the No. 1 store in the company and having them call me and say I had to cut my payroll by X amount,” he said. “I'm like, ‘You’ve got to be kidding me, I can’t cover the floor now. I can't keep the store straight. I can't wait on the customers. You're telling me I have to cut the number?’”

A store that lacks staff is vulnerable to theft and misses a key opportunity for customer engagement, experts say.

“Selling costs go up a little bit, but maybe shrink is going to go down to compensate for it,” Peterson said. “People are going to steal, so you need to think about that and work towards preventing it. One of the best ways, an unspoken advantage, is just having people on the floor. People will steal less if there's people on the floor because if not, what do you think's going to happen? It's a free-for-all. It's a bunch of shelves with stuff for thieves on them.”

Labor productivity is a major factor in cost containment, but retailers and brands should take into account the value of customer interactions in stores, Baird said.

“If you think about engagement — time spent, either at an employee level or even at a brand level — you can use that to understand cross-channel engagement,” she said. “Just how much time is this consumer spending with the brand? If they're browsing my social media feed, great, that is a level of engagement. But if they're standing in a store, and talking to a store associate, you can't get more engagement than that. That should be the top level.”

What it takes to hire and keep store workers

In 2023, hiring platform Checkr found that 74% of retail workers were either looking for another job or thinking about it. 

There are several possible reasons for this. In late 2023, David Johnston, NRF vice president of asset protection and retail operations, told the House Homeland Security Committee’s Subcommittee on Counterterrorism, Law Enforcement and Intelligence that organized retail crime and fear of injury or death were major factors in the industry’s struggles to hire store workers. In written testimony to the committee, the group said there were 543,000 job openings in retail and “a clear shortage of workers,” characterizing retail jobs as “good-paying” and a “foundation for successful careers.”

But other research finds pay to be a major sticking point for store employees, while safety doesn’t show up as a top concern. In recent years, several major retailers, including Walmart and Target, have beefed up their starting pay to $15 per hour or so, and some jurisdictions are mandating even higher rates. Costco has made a point of being a leader in this area. Yet even those wages in many areas are still below a living wage.

In 2022, the real median earnings of retail salespeople was not statistically different from 2010, according to a December 2024 report from the U.S. Census Bureau. Cashiers were among the lowest paid, with median earnings of $27,174, nearly half of the median earnings for all full-time, year-round workers. Overall, the worker shortage in retail is due in part to low wages, according to staff placement firm Adecco’s Adia unit. 

“I have two words for every retailer about associates: pay them,” WD’s Peterson told an NRF audience in January 2024. “Pay them, pay them! The more you pay them, the better they will be, that’s just the bottom line.”

Peterson cites Costco as a retailer with well-compensated employees who like working there, and Ace Hardware as another with plenty of helpful staff in its stores.

But some retailers that have boosted their wages subsequently hired fewer people or shortened shifts in order to keep labor costs in check, undermining the appeal of those jobs and compromising store operations, experts say. Good pay is important in enticing and keeping retail workers, but they have other considerations as well. Understaffing itself is a reason why many leave retail jobs, according to the Scandit research. Otherwise, work-life balance, competitive salaries and access to easy-to-use tech are the top three drivers of employee loyalty in retail, per that report.

According to research from Customer Management Practice, compensation comes in fourth, behind, in order, a good manager, flexibility and career development opportunities. Peterson also believes that brand matters most to many prospective retail workers, giving cool brands a hiring advantage over uncool ones, he said by phone.

Retailers are aware that stores should be well staffed, according to Aptos’ Baird.

“I think it's more a question of, ‘Where is this money going to come from?’” she said. “Part of how we got into where we are today, in terms of theft and self-checkout and all that fun stuff, is that wages went up, but labor budgets didn't. The natural result of that is many retailers are staffing less, and something has got to give.”

CVS Health introduced a mobile app that allows shoppers in a handful of stores to unlock secured display cabinets to access merchandise, the company announced in January 2025. The feature is a test for now. 

With the app, which succeeds the retailer’s previous CVS Pharmacy app, shoppers can also access savings offers and pick up prescriptions in stores using personalized barcodes. Through partnerships with Everyday Health, Headspace and other companies, CVS app users will have access to a variety of health and wellness content.

The drugstore retailer also leaned into AI for the overhaul, integrating AI into its search functions to help shoppers locate products, services and information. It plans to add a conversational AI chatbot to answer questions about medication refills and order status later in 2025.

CVS’ unlocking feature follows shopper frustration with retailers securing inventory in stores as a way to deter retail crime.

Some drugstores and mass-market retailers, as well as beauty retailer Ulta, have turned to locking products behind glass to prevent theft, and staffing issues further deter shoppers from buying the products they want, experts told Retail Dive. While 62% of consumers will wait for assistance from a store staffer if they find a product locked up, 27% of shoppers will abandon their purchase or choose a different retailer, according to a survey from the data technology company Numerator. 

CVS’ app also includes features to manage shoppers’ healthcare needs, including vaccine scheduling and prescription management. The retailer will continue enhancing its mobile app with additional features, including personalized recommendations and educational content for patients with chronic medical conditions and efforts to connect them to cost savings and copay assistance programs. 

“As a company, we are super focused on improving the health care experience,” Tilak Mandadi, executive vice president at CVS Health, said in a statement. “The CVS Health app will make it easier for our customers to access and manage their health and care, save time and money, and make informed decisions about their health.”

The app upgrade comes a few months after CVS announced plans to lay off 2,900 employees, about 1% of its workforce, on the back of a plan released in 2024 to reduce expenses by $2 billion. Just weeks after the layoffs, CVS named David Joyner as its chief executive officer, replacing Karen Lynch. 

Alongside its cost-cutting efforts, CVS has also invested in its product assortment, welcoming several new brands. In July 2024, the drugstore chain introduced tween period care brand Pinkie across more than 3,300 locations. Days later, the skin care brand Curology announced its expansion into 3,800 CVS locations. 

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Over half of retailers completed a major payments modernization program within the past year, a KPMG modernizing payments report found. For most retailers, the work is not over: 4 in 5 will once again update their payments infrastructure or plan to do so.

Almost 3 in 5 retailers in North America report changing customer expectations as the top factor triggering payment modernizations. The findings are based on a survey by KPMG International of 810 financial institutions and 690 retailers.

A seamless payment experience is critical to customer satisfaction, according to a statement from Duleep Rodrigo, national sector leader of consumer and retail at KPMG U.S. The right delivery can improve operational efficiency and help provide insights into customer behavior, Rodrigo said.

As digital payments become more mainstream for consumers, retailers are trying to keep up with the payment methods they accept. Retailers need to make significant investments to navigate legacy systems, data security and privacy concerns, KPMG found. 

When modernizing their payments, 3 in 5 retailers are working to upgrade and implement digital payments, KPMG found. Nearly the same number are working to add new payment options. 

“Implementing and integrating new payments platforms can be complex and time-consuming,” Courtney Trimble, lead of global payments at KPMG, said in the report. “Despite these challenges, executives recognize the benefits of payment modernization as a catalyst for growth and innovation.” 

One of the biggest roadblocks is cost. Nearly two-thirds of respondents said the top challenge when creating a modern payments program for retail is the cost of implementing new technologies. For over half of respondents, training staff from old to new systems is also a challenge.

Rodrigo said that younger generations of consumers increasingly gravitate to contactless payments, mobile wallets and other digital solutions compared to cash and credit cards. In support of digital efforts, three-fifths of retailers surveyed already offer an app or plan to launch one.

Though Gen Z in particular enjoys in-person shopping, their preferred methods of payment lean digital.

However, frictionless payments come with its pros and cons. While contactless methods of paying can cut transaction times, improve data security and boost customer satisfaction, they are still more vulnerable to certain privacy risks. Bad actors can exploit consumer behavior information for purposes like unauthorized purchases.

When customers walk into the Sam’s Club in the Dallas suburb of Grapevine, Texas, they might notice that traditional checkout counters and self-checkout kiosks are nowhere to be found. 

Instead, all customers must use the Walmart-owned club retailer’s Scan & Go tool to buy items.

“[The store is a] statement of where we want to go in the future,” Sam’s Club President and CEO Chris Nicholas said during a session at Groceryshop in October 2024. 

The store, which opened last week at 1701 W. State Highway 114, is located near another innovative format in the Dallas area: Sam’s Club Now, a checkout-free technology store and “tech hub,” which is reportedly about one-fourth the size of one of the retailer’s traditional clubs. That location, which opened in 2018, has served as a testing ground for technology such as the now-chainwide ability for members to buy alcohol using the Scan & Go app. 

While Sam’s Club Now is smaller, the approximately 150,000-square-foot Grapevine store is slightly larger than a typical Sam’s Club location. It’s the latest step in Sam’s Club’s almost decade-long effort to trial new solutions and merchandising tactics to better appeal to customers and streamline operations. And it comes at a time when Sam’s Club is seeing “rapid adoption” of its checkout-free technology, Nicholas said in an Omni Talk interview. 

Checking out without traditional checkouts

Workers stationed at the store’s entrance and exit will be able to help consumers figure out how to use the technology, Nicholas told Omni Talk. For members who need assistance, store associates with mobile point-of-sale systems can help with the checkout process, according to a Sam’s Club spokesperson.

There are three automated, receipt-verification “exit trusses” instead of the standard two at other Sam’s Club locations to help people more quickly leave the store, the spokesperson said.

Digitally-engaged members — people who use Scan & Go, the computer vision-enabled receipt-verification exits and shop online — spend three times as much and are more loyal, which leads to higher renewal rates, Nicholas said during the conference session. Chainwide, about 30% of Sam’s Club’s customers use Scan & Go regularly when visiting the company’s stores and half of its customers are digitally engaged. 

“What we find is that it doesn't matter what generation you're from — whether it’s Gen Z all the way through to the Greatest Generation — or what income level you are, or whatever your background is. Once you allow yourself to be connected to that digital ecosystem, you just never go backwards,” Nicholas said during the Groceryshop session. 

Ramping up omnichannel shopping

Along with the app-based scan-and-pay technology, the store is also allowing Sam’s Club to respond to and prepare for more e-commerce transactions and omnichannel shopping behaviors. Sam’s Club shoppers are increasingly interested in stopping in to pick up a few items rather than primarily buying large quantities of goods, Nicholas said during the Groceryshop session.

The store has about 6,000 square feet dedicated to online order fulfillment — about four times the typical space earmarked for picking and packing pickup and delivery orders. 

“We expect online pickup and delivery to be huge there,” Nicholas told Omni Talk. 

There’s even a new omni-fulfillment carousel that stores items being prepared for fulfillment orders. Other e-commerce features include the use of refrigerated totes for online orders and high-speed doors in the fulfillment area for faster picking.

On the labor front, the store has added a dedicated manager and two team lead positions for fulfillment.

Outside, shoppers can find 32 dedicated parking spots — more than double the typical 14-16 at most clubs — for curbside pickup.

In the space where the checkout registers would normally appear, the store will instead have “inspiration spaces” with interactive displays where customers can view online-order items, Nicholas said. Shoppers can then scan a QR code to buy these digital-only products, which include a holiday tree and a Mercedes SUV, in the app. 

The store is also testing a new system that delivers food orders to an assigned cubby after customers place a Scan & Go order, a company spokesperson confirmed. In the cafe section, customers can find cubbies for quick order pickup. 

Other innovations

At the cafe, there’s a pizza robot that can make as many as 100 pizzas in one hour, the spokesperson said. 

Sam’s Club is benefitting from Walmart’s ongoing investments in supply chain technology, allowing the club retailer to quickly scale digital systems without the typical implementation costs, Nicholas said during the Groceryshop session.

The club’s tech deployments streamline workers’ jobs and give them more time to interact with customers, Nicholas told Omni Talk. For example, The computer vision-enabled floor scrubber takes 23.5 million images a day and helps improve inventory management for workers, Nicholas said. 

The Sam’s Club spokesperson said that although there will be no change to the number of store workers at the Grapevine location, some will have new roles. 

Not all of the store’s new features center on technology. Upon entering, customers are greeted on their right-hand side by a large mural painted by a local artist.

Another attraction is a large sushi island located in the fresh department. The sushi island is part of this club’s “experiential merchandising layout,” which also includes gourmet cheeses, a floral section, “a quality assortment of wine” and a fresh tortilla machine in the bakery department, the company said.

The store also features the company’s biggest cake case to make restocking easier for associates.

Nicholas told Omni Talk that Sam’s Club’s embrace of innovation stems partly from the club retailer’s reputation for being “the tip of the spear on innovation within Walmart.” 

“If you’re grounded in solving people’s problems and you’re listening to them, it gives you a lot of confidence for making changes,” Nicholas told Omni Talk. “The second thing is, it’s OK to just fail as long as you’re learning.”

Following initial in-store tests of Lowe’s Style Studio on Apple Vision Pro, the retailer expanded a pilot program to select stores in Northern California in April 2025. 

Over the following three months, customers at Lowe’s Bay Area locations in Sunnyvale, Concord, Dublin, East San Jose and South San Jose will be able to utilize the service. The retailer in March rolled out tests of the technology in five Austin, Texas-area locations, also for three months.

Customers can book free appointments to use Lowe’s Style Studio, which allows them to visualize and redesign a kitchen’s features, including appliances, cabinet colors, countertops, styles and other fixtures, before actually renovating their space.

Lowe’s, which launched its Style Studio app designed for Apple Vision Pro in February of 2024, first brought the tech into select stores in June that year for a weekend-long test experience. Since then, the retailer has updated the in-store experience, adding a companion app that allows friends and family to design together, and a transport feature that makes it easy to move around the room, per a company spokesperson.

Lowe’s Style Studio is an immersive, 3D experience that allows customers to design their kitchen using Apple Vision Pro technology. The tech combines spacial computing with home improvement, so shoppers can change the colors, styles and features around them in real time. 

"We try on clothes, sample paint colors, and test drive cars to help us decide before we buy," Chandhu Nair, Lowe's senior vice president of data, AI and innovation, said in a statement. "Customers deserve that same confidence when it comes to home renovation. With Lowe's Style Studio, consumers don't have to guess what their new kitchen could look like — they can step into it and experience their style choices together as if they are actually there."

Other home retailers are dabbling in technology as a way to help shoppers visualize their choices. Furniture retailer Joybird brought its own version of tech-inspired visualization to mobile devices in January 2025, noting that 70% of its traffic comes from mobile devices. 

Through its product visualization tools Decorify and Muse, Wayfair allows shoppers to find product recommendations based on images. Decorify does so through user-uploaded images, while Muse uses AI-generated images of home interiors to motivate consumers and give them ideas for purchasing.

“Home improvement projects are often large, complex and highly personal, making tech adoption uniquely important,” said Nair. “Because of this, technology is a key part of our total home strategy. We’ve been exploring and investing in AI for a decade, and we have consistently been the first home improvement retailer to test and bring to market technology including a store digital twin, the first retail app for Apple Vision Pro, and Mylow, our customer-facing AI-powered virtual assistant.” 

A spokesperson confirmed that Lowe’s has officially rebranded its digital home platform to MyLowe’s Home, and also said it will open a new store in East Asheville, North Carolina.

Lowe’s reported net sales for fiscal 2024 of $83.7 billion, a 3% decline from 2023. Operating income fell 9.4% to $10.5 billion and net income declined 10% to $7 billion year over year. 

In April 2025, the company announced that it would acquire Artisan Design Group for $1.3 billion. 

In February 2024, Lego transformed its Battersea Power Station store in London into a flower shop. 

All the flowers were made of Lego Bricks, of course, and employees put together 220 sets to create “Le Florist.” 

Guests are immersed into an experience, Martin Urrutia, Lego’s head of global retail experience and innovation, said to an audience at the National Retail Federation’s Big Show regarding the floral transformation. “A couple of months ago we landed a spaceship in the center of the store. We have Santa’s chair — made of Lego bricks — with a fireplace. That’s what delights and creates memories for shoppers.”

That’s because physical retail spaces can be considered a media channel, a place for storytelling and a way customers can see and engage with a brand, according to Urrutia.

But retailers must have the fundamentals in play. That goes back to stock availability, the correct physical location and streamlined communication, per Urrutia. And while experiences can be created within a store, employees enable storytelling.

The toy maker has also been bridging its online and in-store efforts. In fall 2024, the company began hosting gaming-themed workshops both digitally and at select locations. 

Lego has also been experimenting with livestreaming and found that the best possible studio for the venture may be its own stores.

“We already have the product. We have the set,” Urrutia said. The company also has found that its own employees make exemplary livestream hosts. 

“They do a great job talking to customers every day. So why not allow them to be on livestream? They are great stars,” Urrutia said. “They’re very authentic. We love the passion that they bring.” 

Lego has also removed some of its standard shelving to create a personalization studio where customers can create customized Lego Minifigures. Shoppers can pick between preselected designs or create something new by adding text, decorations and drawings to their figures. 

“We're removing the space from products, but we believe that will make the store visit unique and we’ll keep shoppers engaged to come and visit again,” Urrutia said.

Instagram user Jacey Adler recommended the experience as a dating idea in New York City that “isn’t just going to bars or restaurants.” 

 

 

 

 

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The notion of being able to draw in adults for a toy retail experience may be of particular importance as the cohort accounts for more toy sales than preschoolers. Nearly half of all adults had purchased a toy for themselves within the previous 12 months for reasons including collecting, socialization and enjoyment, according to a June 2024 report by Circana. 

Thus, the storytelling that takes place within Lego stores is part of the larger consumer draw. Urrutia urged other retailers to think about the story they are telling to shoppers when it comes to in-store experiences. 

“The expectations are to deliver best-in-class experiences where the brand will come to life,” he said. 

Grabango, a checkout-free technology company whose software was piloted in several U.S. convenience store chains, has permanently ceased operations. It’s unclear how Grabango’s demise impacts the convenience retailers it partnered with over the years, including 7-Eleven, GetGo Café+Market, Circle K, MAPCO, Coen Markets and Chevron.

Grabango was founded in 2016 by Will Glaser, who previously launched subscription-based music streaming service Pandora. Less than a decade later, the company found itself unable to secure the funding it needed to continue operating, a spokesperson said.

News of Grabango closing down comes amid declining interest in pricey store technology from retailers and more than a year after the company laid off workers across several departments, including marketing, engineering and sales. 

At the time, Chief Marketing Officer Ken Fenyo declined to share how many staffers were let go, although multiple LinkedIn posts from impacted team members indicated cuts hit 40% of the company.

Now, Grabango has shut its doors entirely after failing to pull together the funding necessary to keep going. In a statement, the company said the decision to close operations “was an extremely difficult one to make.”

“The company would like to thank its employees, investors, and clients for all their hard work and dedication,” Grabango’s spokesperson said in the statement.

Grabango made waves in the c-store industry when it partnered with GetGo and its parent company Giant Eagle in 2020. Over the next two years, its technology arrived at convenience stores under the Circle K, BP, MAPCO and Chevron banners. Its technology was also on display at an Aldi grocery store in the Chicago area.

Similar to Amazon’s Just Walk Out technology, Grabango kept track of what shoppers picked up inside the store as soon as they entered. When ready to leave, customers would scan a code in the Grabango mobile app, and their payment would automatically process.

Despite its enticing promise to eliminate checkout lines, automated technology like Grabango’s has struggled to gain traction with retailers. Although numerous c-stores have piloted these systems, most have opted to roll out less-expensive self-checkout kiosks on a wider scale. Retailers are also being careful with their spending on technology as consumers’ budgets have tightened.

Amazon, which pioneered automated checkout with its Just Walk Out system, has scaled back the technology in its own stores and is primarily focused on selling it to vendors in stadiums, airports, college campuses and other high-traffic areas.   

An increasing number of retailers are dusting off a decades-old technology in order to streamline their inventory management, and some experts believe it could go far in tightening up the industry’s loose accounting of shrink and theft.

Radio-Frequency Identification (RFID) tech evolved from work in radar around World War II, and has had many applications since, according to the Institute of Electrical and Electronics Engineers. It employs various radio frequencies to transmit information between a stationary location and an object or between objects, including moving objects.

This makes it handy in inventory management throughout the supply chain, which is why it’s been employed by retailers for at least 20 years. The tech uses electromagnetic fields to wirelessly transmit data between a reader and a tag affixed to an item. 

Despite its already routine and expanding use — 61% of retailers plan to be using it by 2026, according to Zebra Technologies’ latest global research —  it remains underutilized, experts say. Yet, RFID could be instrumental in solving shrink and theft issues that are confounding the industry. More than 60% of shrink is due to reasons within a retailer’s own operations, and RFID tech allows retailers and brands to glean and integrate information about where an item is or where it went, when it was sold and at what price, whether it was lost, and more.

“If we look at retailers today, they often have good intelligence on what's leaving the warehouse and what goes through point of sale,” Brad Bogolea, co-founder and CEO of Simbe, which leverages RFID, computer vision and AI to fuse various data points. “But there's a lack of visibility around whether products are actually stocked — are they in the right place, do they have the right price. With the fusion of data points, we can illuminate when there’s an issue — whether it’s stocked, lost, damaged, stolen or misplaced.”

Inventory management

The most obvious use of RFID tags may be to track inventory.

At Macy’s, which has employed RFID in some capacity for nearly 14 years, inventory counts that once could be taken only once a year have been drastically compressed and can be done more often, according to Joe Coll, Macy’s vice president of asset protection operations and strategy.

“If it's seasonal goods, you can nail it down to three or four months when you would have had that product inside of your building,” he said, speaking to a National Retail Federation audience in January 2024. “But when you start to get RFID penetration on your product inside of your buildings, and you start to introduce monthly cycle counts, you now take a 12-month window of great unknowns and compress that down to 30 days.”

Bill Hardgrave, who founded the RFID Lab at the University of Memphis, where he is now president, said that the lab’s research shows that the traditional annual inventory snapshot breaks down almost immediately, leaving the same cloudy picture from before the count began.

“One of the biggest factors in the deterioration of inventory accuracy is shrink, the loss of that product as it goes along the supply chain, from a variety of reasons,” he said, also speaking at NRF’s Big Show conference. “We would track the deterioration and as few as six weeks after taking that annual inventory, it had deteriorated back to its previous level, much of that due to shrink.”

The accuracy afforded by RFID-enabled counts also helps avoid “frozen out of stocks,” where merchandise fails to be replenished because the retailer thinks it has more than it really does, Hardgrave said. Coll said that at Macy’s RFID tech updates buyers daily. 

“We're leveraging the shrink visibility to get merchandise visibility, and to get back in stock the product the customer wants,” he said.

Tagging everything, everywhere

One reason many retailers miss out on the full potential of RFID is the belief that only certain types of merchandise, or only expensive products, benefit from being tagged, according to Marshall Kay, global director of retail transformation services at Avery Dennison.

“There's been a misperception that RFID perhaps is most relevant for soft goods like apparel and towels, linens, things of that nature,” he said, speaking at the NRF conference. “Today we're tagging so many other goods. We're getting to a point where, if you sell it, we can tag it. Things with liquids and metals, fragrances, lipsticks — you can tag a frying pan. So from that perspective this is more relevant to you than you probably think.”

Despite its familiarity with the tech, Macy’s has only recently realized a range of benefits from RFID beyond inventory counts, according to Macy’s Coll. In addition to tagging a range of merchandise, the department store has expanded RFID to cover more entrances; Coll calls these “smart exits.”

The company realized that merchandise on the first floor might be taken out the door from an exit on another level, and began tagging all entrances, which at Macy’s stores can be as many as 10. This way, the retailer is now able to spot "those individuals that are causing the biggest distortion and biggest loss events inside of our stores," Coll said.

“You’re getting video timestamps of every individual that took product out of your building without paying for it,” he said.

To the retailer’s consternation, that included many longtime employees who had gained its trust over the years, including one who had worked at Macy’s for more than six decades. Theft by employees accounts for about a third of all shrink, and the NRF considers it “just as concerning for retailers as other forms of theft,” according to its latest shrink report.

“I like to think they were not stealing for 62 years,” Coll said. “But they were stealing from us, and they had been working for us for 62 years.”

Loss prevention, or at least detection

Expanding the use of RFID technology could provide the retail industry with sorely needed data around shrink and theft.

Viral videos of alarming, sometimes violent smash-and-grab incidents at stores have captured the public’s attention, but have done little to shed light on the scale of the problem, leaving law makers and law enforcement scratching their heads. In 2023, the NRF retracted its key statistic on organized retail crime. Policy makers in Congress and elsewhere have called on the industry to improve its data on the issue.

It has become “very, very clear that, in order for this to fully get on the radar of the political element ... and prosecutors, there needs to be more data,” Kay said. “There needs to be the ability to connect dots that in the past haven't been connectable, and it's very encouraging to see that great progress is being made on that front.”

Hardgrave noted that even now, RFID’s strength lies more in loss detection than prevention. But widespread use of RFID, which was identified by the lab as useful in loss prevention two decades ago, could provide a more thorough picture that could finally enable true loss prevention, he said, speaking to the NRF audience. That includes fraudulent returns, which the NRF pegs at 13.7% of 2023’s $743 billion in returns, which extrapolates to $101 billion.

“Especially for chain stores — they steal from one store and they return it to another store,” Hardgrave said. “With RFID, you capture that when you’ve got full visibility through point of sale.”

In searches for stolen merchandise from Macy’s at venues like flea markets, Coll has also found goods taken from other retailers, including Dick’s Sporting Goods, thanks to information on the RFID tags. And the data can show law enforcement an item’s trail.

“If we can only prove the movement of stolen property across state lines, then the FBI would be all in,” he said. “When you have RFID, not only can I prove that the product was stolen out of Chicago and moved to Queens in New York, but I can then tie it back to the smart exit, give them the video of the fence operator in Queens that's actually seen in the Chicago store taking the product out of the building. You're talking about gift wrapping a case for federal law enforcement.”

Coll deems RFID a “game-changer” for Macy’s stores, while Hardgrave calls it “table stakes” for all retailers. 

“If you do not have RFID, if you do not have serialized data on your products, you cannot compete,” Hardgrave also said.