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Has RFID Finally Found its Place in Retail

Has RFID Finally Found its Place in Retail?

When it comes to online retail domination, using the newest technologies is commonly regarded as a defense strategy for traditional retailers. But could salvation actually be found in an older technology which, at last, appears to find its place?

Aside from some false starts and eagerly publicized trials, radio frequency identification (RFID) technology never quite delivered on its promise to be the next great thing in inventory control.

Now it seems RFID might finally be ready for retail and better still, appears to offer value across a far wider range of applications than those previously anticipated.

Retailers are seeing significant benefits from RFID

Source: Kurt Salmon RFID in Retail Study 2016

RFID Technology: An Omnichannel Essential?

While the prices of tags, hardware, and mobile application development services for RFID implementation continue to come down, it stands to reason that if you’re considering possible use cases, you’ll want to exploit RFID in any way that optimizes returns, so why limit your business to using it as an inventory management tool?

For example, if your enterprise is in the early days of its omnichannel strategy implementation, you probably don’t need anyone to tell you that tracking inventory across multiple channels is tough.

Omnichannel Inventory Accuracy

Source: Parker Avery Group – Omnichannel Inventory Accuracy: Implications and Customer Impact

Unfortunately, when it comes to omnichannel retailing, poor inventory visibility directly impacts customer experience, which is why retailers like Macy’s are prepared to invest in RFID tags for every item that they carry.

RFID is proving invaluable in honoring the promise to provide consumers with the products they want when they want them, using the delivery methods they demand—not to mention fast and simple procedures for returning purchased products.

Enhancing Customer Experience with RFID

Perhaps, if omnichannel retail had emerged much earlier than it did, the use of RFID would be more widespread today. It’s almost as if RFID was once a technology too far ahead of its time and that recent changes in the retail environment have exposed its true potential.

That potential extends from inventory management and visibility to applications in customer experience enhancement, crime prevention, and even cashless in-store payment.

It helps of course, that an RFID device (tag) can be attached (or built-in) to just about anything, a fact not lost on forward-thinking enterprises experimenting with RFID-powered customer relationship management.

In fact, luxury goods retailer Rebecca Minkoff seems determined to prove that anything and everything in a retail store can be turned into a hi-tech customer experience enabler. Even the dressing-room mirrors in the company’s New York flagship store have built-in RFID readers, so customers can call up information about the garments they’re trying on.

A New Way to Pique Consumer Appetites

Innovative uses of RFID are not unique to luxury and fashion retail. In other sectors, retail brands like Dairy Queen have been operating RFID-powered loyalty programs for a few years, using tags built into loyalty cards or attached to members’ cell phones.

These tags alert staff when program members enter the retailers’ outlets, allowing sales associates to call up sales histories, welcome customers personally, and make recommendations based on their previous purchases.

If that should seem excessively futuristic, you might want to consider consumer opinion on matters of loyalty and retail experience. According to Accenture, nearly 60% of consumers say they appreciate purchasing recommendations from sales staff and are more likely to purchase in response to this kind of attention.

RFID in Provenance and Profit Protection

Retail shrink, which includes losses from shoplifting and employee theft, increased to a total 1.44% of sales in 2016 according to the National Retail Federation. That’s up from 1.38% in the previous year. In efforts to buck the upward trend, some retailers are turning to RFID technology as a way to combat theft, a task which the technology is particularly well suited for.

What were your top three reasons for implementing RFID

Source: RFID Journal – The Renaissance of RFID Among Retailers

Vastly superior to the Sensormatic tags used by most retailers, RFID tags can be used in the same way—to set off an alarm when an unpaid-for item passes through the exit door—but also to provide real-time intelligence as to exactly what that item is.

However, theft isn’t the only security issue that RFID tags and readers can help to thwart. In the apparel and fashion sector, counterfeit products are a huge issue, particularly in Europe, where the OHIM (the EU intellectual property agency) claims fake fashion items account for up to 10% of total sales.

High-end retailers are responding with RFID tagging “at source” to prove product authenticity and combat counterfeiting. This is being made possible by the latest developments in tag construction, which gives manufacturers the ability to produce tags that can withstand being washed, dry-cleaned and just about anything else which might happen to an item of clothing after purchase.

Taking Convenience to a Whole New Level

Interestingly enough, while retailers on our side of the Pacific use radio frequency technology to stop people taking goods when nobody’s looking, Japanese retailers are happy to use RFID to help them do so. No less than five convenience-store chains in Japan (including Seven-Eleven) are ready to implement an RFID self-checkout system.

The solution is able to detect shoppers’ purchases (without the need for individual item scanning), display the total to pay and then record their payment by cash or card, before finally issuing a receipt. The entire checkout process takes place in just a few moments and with no intervention from sales staff.

Who Needs Cash When You Can Pay By Radio?

The new solution in Japan might not represent the self-checkout utopia of the future, since shoppers must still present their purchases at an automated counter, and there’s no seamless, over-the-air digital payment process. Yet for consumers, it’s still a huge step forward from lining up and waiting for items to be scanned individually.

88% of US adults want their retail checkout experience to be faster

Source: National Retail Federation: A Better Experience Beckons

Closer to home, retailers such as Zara and Rebecca Minkoff are also making use of RFID for self-checkout.

As self-checkout adoption increases, it’s hardly stretching the imagination to assume that before long, dynamic price tallying and cashless payment processes will mean shoppers don’t need to go near a physical checkout, counter, or pay station. In fact, they probably won’t be able to find such a thing even if they want to.

Is Your Retail Business Ready for RFID?

When considering RFID implementation, most retailers naturally think first about inventory visibility and management in the supply chain, the stockroom, and on the sales floor.

It’s becoming apparent though, that after many years in the shadows RFID is ready for retail and offers advantages in security, customer service, omnichannel distribution management, and in-store payments.

Will your retail enterprise be implementing RFID technology anytime soon and if so, what applications appeal the most? Do you see tagging as a good way to beat counterfeiting or would you worry about the risk of cloned tags?

How about tagging at the item level… Is it overkill or the only way to go? We’d love to know your thoughts, but whatever your viewpoint, you can be sure that RFID is here to stay and has finally shed its image as a retail technology-in-waiting.

Ekaterina Prohorchik