Introduction Retail competition has reached a new height where stores must constantly evaluate business models and consumer trends to attract and retain their customers.

The retailers’ are working to reinvent themselves in the face of this heightened competition. Key challenges before any retailer are how to improve the crucial processes or points of stores for better customer satisfaction and help employees do their jobs more effectively and comfortably and above all reduce the costs of company. Critical Areas in Retail Store “Shrinkage is an on going headache for retailers who lose thousands of pounds a year not only from shoplifters but also internal theft by employees,” (“Combating Shrinkage Culture”, 2007). Yes, the employees of the stores themselves are often the thieves.

Loss from theft significantly affect a retailer's financial performance. Another critical area is out of stock situations. “Out of stocks is a major problem for retailers, suppliers, and consumers. Nationally, the average out of stock rate is about 8% (Corsten and Gruen, 2003) which means that about 1 out of every 12 items on a consumer’s shopping list is not on the shelf.

The result: lost sales and unhappy customers,” (Hardgrave, Waller & Miller, 2006). Proposed Changes In today’s competitive retail market scenario, an organization can achieve its growth targets if its performance is monitored continuously in all fields like customer satisfaction, process improvement etc. For this the following critical areas can be made more effective by making some small but crucial changes. ? Retail Security ? Out of stock situations Retail Security Retail security can be improved by RFID system. Radio Frequency Identification (RFID) is a system of small electronic tags that transmit data via a radio signal to RFID readers and related hardware and software infrastructure. Simple security devices like Electronic Article Surveillance (EAS) based on RFID can be utilised in retail stores to drive down shrinkage loss.

RFID tags can be applied to the items in the store and can be read by sensors in the store. If someone pays for the item these tags can be removed or deactivated at the counter and person can leave the store. But if the person does not pay and try to walk out of store the reader at the door detect the tag and will sound an alarm or alerts the staff. Out of Stock Situations There can be many reasons for out of stock. One of the most common reason for out of stock can be shelf replenishment i.

e. product is in the store but not on the shelf. An automatic, real time monitoring about shelf replenishment can be better idea than manual checking of shelves by employees. Here again RFID technology is feasible. RFID readers can be placed on the shelves that can automatically monitor how many products are being sold and would signal the backroom when shelves get low and request more items to be brought out to the shelves.

With RFID, store can know what cases have been delivered to the store, taken to the sales floor, or stocked in the backroom. A much more accurate view of inventory both on the shelf and in the backroom can be maintained and need for manual inspection could be eliminated leading to less burden on the employees. Conclusion So adoption of new innovative methods like RFID can lead to reducing shoplifting losses thus increasing profitability, increasing sales when low items on the shelves are detected automatically and depleted stocks are immediately put on live sales floor thus creating more pleasant environment for the customers and employees. Works Cited “Combating Shrinkage Culture.” News, The RetailBulletin : The Retail News Resource.

January 19, 2007 December 1, 2007 Hardgrave, Bill C., Matthew Waller and Robert Miller. “RFID’s Impact on Out of Stocks: A Sales Velocity Analysis”, 2006. Information Technology Research Institute, Sam M. Walton College of Business, University of Arkansas. < http://itrc.uark.edu/research/display.asp?article=ITRI-WP068-0606 > December 1, 2007