Has RFID at retail finally passed the long-awaited tipping point?
SCDigest Editorial Staff
Through a special arrangement, presented here for discussion is a summary of a current article from Supply Chain Digest.
In the early days of radio frequency identification (RFID) technology in retail, around 2004, no small number of pundits were predicting the U.S. market was on the verge of reaching one of several tipping points, where adoption gained real traction.
It never happened — though perhaps it finally has now.
Accenture’s bi-annual study finds RFID use in North American retail “booming,” with 93 percent of chains using the technology. While almost equal to the 92 percent in the last study in 2018, the big change is deployments. As shown below, retailers only piloting RFID has shrunk to 8 percent from 48 percent, while full adoption has climbed to 47 percent from 28 percent.
Those numbers for 2020 frankly seem high to SCDigest, but maybe not.
E-commerce is fueling much of the adoption, with high inventory accuracy levels needed to support processes like store fulfillment and BOPIS.
Fully-adopted retailers reported a modest 10 percent return on investment (ROI) compared to 9.2 percent in 2018, although the measurements may exclude benefits to the customer experience from ensuring inventory accuracy is high.
Relatedly, retailers that have engaged with suppliers on source tagging were found to be seeing a 16 percent higher ROI than those that have not.
“Full adopters of RFID have all moved to source tagging and, overall, 45 percent of retailers say they are engaging with their suppliers on source tagging,” Accenture stated, adding, “Due to the magnitude of moving to full implementation, source tagging is a must to help rationalize labor for this task.”
Still, a slight majority of retailers aren’t making it past the adoption stage. Roadblocks cited include quantifying the value of RFID, identifying the right suppliers and partners and having the ability to train employees.
Accenture offered suggestions on overcoming these challenges:
- On calculating RFID value, plenty of data is available to quantify the potential returns of rapid piloting and testing;
- A broader ecosystem of technology partners, suppliers and advisors can support rapid advancement;
- On training store workers, RFID “requires changes to store operations and this effort must not be underestimated. Having a solid change strategy is critical to gain buy-in and support to implementing RFID.”
DISCUSSION QUESTIONS: Is retail past the tipping point on RFID adoption? What barriers remain that are holding back fuller deployment?