Affiliations: Department of Engineering and Architecture, University of Parma, Italy
Correspondence:
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Corresponding author: Antonio Rizzi, Prof, Eng. Ph.D, Department of Engineering and Architecture, University of Parma, Italy. E-mail: rzzntn@gmail.com.
Abstract: RFID item-level tagging is a powerful tool for improving inventory accuracy, which is a prerequisite for both omnichanneling strategies and store floor replenishment from the backroom. This paper explores how retailers can leverage RFID item-level tagging further to optimise product merchandising in the store area, to map store floor performance and, ultimately, to increase sales. To this extent, we introduce new original metrics that are enabled by RFID item-level tagging. These metrics aim at monitoring the net profit (NP) of sales areas (store money mapping) and classifying product lines (PL), understood to be a combination of model and colour, in terms of generated profits and costs to display (CD). We introduce three PL categories—money makers, indifferent and money losers—based on the NP/CD ratio, and we propose different strategies for each category to aid store managers in optimising sales performances. We have been testing the proposed approach for more than a year in three flagship stores of a major fashion retailer. The results have shown consistent sales increases in RFID managed stores compared to non-RFID test stores. The proposed RFID visual merchandising is specifically tailored for small-sized fashion retail and luxury outlets. Usually located in very expensive areas, these stores have limited display space available. Therefore, retail managers seek to understand what is actually worth displaying and where, to reduce costs and sustain consistent store sales. Future works could also address whether the proposed approach could boost sales in large retail outlets.
