RFID use reaching a ‘tipping point’

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Mar 30, 2015
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Through a special arrangement, what follows is an excerpt of an article from FierceRetailIT, an e-newsletter and website covering the latest retail technology news and analysis.

RFID is gaining traction with retailers and manufacturers, nearing an adoption and usage "tipping point," according to a recent study from GS1 US.

More than half (57 percent) of the retailers surveyed in the "2014 GS1 US Standards Usage Survey" reported that they are now implementing item level Electronic Product Code-enabled radio frequency identification and an additional 21.1 percent plan to implement the technology in the next 13 to 24 months.

"We believe this sends a clear message to the industry that RFID is the critical enabler of omnichannel retailing," Melanie Nuce, VP of apparel and general merchandise, GS1 US, told FierceRetailIT. "RFID is valuable because it helps retailers understand two inventory essentials for omnichannel success — ‘what do I have?’ and ‘where is it located?’"

The total study sample was 801 apparel and general merchandise companies, although the RFID part of the research was directed to 177 companies, including manufacturers, retailers, and retailers that are also manufacturers such as Macy’s, VF Corp. and Levi’s. The smaller number is comprised primarily of retailers in the apparel/footwear/accessories industry category, which is known to be the most aggressive in using and testing RFID. These retailers reported that 47 percent of items received have RFID tags.

The survey also reported 48.2 percent of manufacturers said they were currently implementing RFID with 18.4 percent planning to implement it in the next 12 months.

"We believe RFID is nearing a tipping point because it is gaining traction as the most reliable solution in delivering on the omnichannel promise to the consumer," Ms. Nuce said. "Since around 2008, retailers have been strategically deploying item-level RFID and its effectiveness has been tested and proven in several types of use cases."

With recent technological advances, more RFID deployments were made possible and they resulted in better equipment solutions, which led to more adoption and use.

"In the future, we expect to see more retailers collaborating with manufacturers to ensure items are tagged at the source, which will enhance efficiency throughout the supply chain," she said. "This will be especially important as retail fulfillment models like buy-online, pick-up-in-store (BOPIS) evolve and require accurate inventory."

Besides the improved inventory read rates, the survey highlighted four other benefits of RFID to retailers: improved sales, decreased out-of-stocks, increased margins and expedited returns.

Do you agree RFID is at a ’tipping point’ as far as adoption at retail? Are the hurdles toward adoption changing? Are there other uses for RFID that retailers should be exploring?

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9 Comments on "RFID use reaching a ‘tipping point’"


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Laura Davis-Taylor
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Laura Davis-Taylor
4 years 10 months ago
I could not be more delighted to see this topic being explored and discussed today. I wrote a white paper two and a half years ago on the power of RFID and its sister technology, NFC, for resolving some of the biggest grievances with the retail experience. As the chips get cheaper and the uses get more powerful, it just makes sense that it’s finally gaining traction. While I don’t think it is the only technology out there retailers should be adopting, it’s clearly a critical one to grease the skids on making some of our frictionless shopping visions real. Planogram compliance can be solved with RFID which means we can solve accurate wayfinding with it as well. Digital content that is responsive to what the shopper picks up or is interested in is solved by it. And when a shopper can hover their phone over an NFC tag to easily retrieve info, opt-in for a promotion, download an app, etc., so many things are solved with no privacy concerns. Great for Android users, but… Read more »
Frank Riso
Guest
4 years 10 months ago
Yes, RFID for the apparel and footwear segments has reached a tipping point but a lot of work is needed to get RFID into the food and drug industry. I think that will happen within the next four to five years. It was the food and drug industry that introduced bar codes to retail, and the apparel industry was the last to use bar codes. Now they are the first to use RFID and the food and drug industry will most likely be the last to use it! Can you imagine what is must be like to open the store every morning and know that you have every item in every size, style and color on the sales floor ready for your customers? Now that is a real benefit to sales. The cost of RFID appears to be a major hurdle for many retailers but they need to measure the cost versus the benefits to see that it is a no brainer to implement item-level tagging. One major step needed for RFID would be the… Read more »
Ralph Jacobson
Guest
4 years 10 months ago
Technologies need to achieve a combination of cost, benefit, reliability and consumer adoption and perceived value, at the very least in order to take hold in the marketplace. For example, beacon technology has actually been in testing in stores for more than a decade. However, based upon the “world’s largest beacon installation” at SXSW in Austin recently, I personally believe that beacons will enjoy wide adoption in the marketplace in the next 18 months or so. RFID has been around even longer, however there have been too many hurdles to overcome for the technology to achieve marketplace-wide adoption. If the statistics in the article are accurate then these non-food categories may indeed begin to spread their presence. However, the number of vendors to comply will match the challenge of the original UPC labeling which was no small feat. Possible, but challenging. Then we have to think about the product categories that will truly benefit: Food (not being implemented anytime soon across the industry) and high-value products (already being implemented to some degree, but mostly being… Read more »
Adrian Weidmann
Guest
4 years 10 months ago

RFID was, and is, a logical complement to the retail ecosystem. The challenge for many yeas was the question of who would bear the additional cost. As tag prices continue to fall the barrier to acceptance is also getting smaller. As retailers expand their BOPIS offering and add the RFID tracking and integration infrastructure to their inventory and supply chains, item tagging becomes a completely viable option.

The evolution of the omnichannel ecosystem demands that items are tracked from the moment they leave the factory through the customer purchase. Certain durable goods (machines, tools, cars, etc.) should have embedded active monitoring devices that go beyond tracking. Many items would do well to monitor the health of these devices that would allow brands to let customers know about service cycles and opportunities, upgrades, and usage tips. If used properly this could open, maintain and support a customer for life strategy where the brand supports the product through its entire life cycle.

Robert DiPietro
Guest
4 years 10 months ago

Adoption will drive cost down which will drive adoption. This is a good cycle to achieve the tipping point. RFID can also be integrated with loss prevention. Have a tag to alert where the product is and insure it doesn’t leave the store without being purchased.

Lee Kent
Guest
4 years 10 months ago

Just like so many things in retail, there comes a time that they simply have to bite the bullet. Such is the case with RFID.

I have been a big proponent of RFID and for those of you who know me, you know that I tend to be 3 to 5 years ahead of retail adoption. Tackling technology changes in retail with all those cobbled together, disparate systems, varieties of hardware, software and operating systems, is not something that can be taken lightly. But, there comes a day…and that day is here.

If retail is going to meet their customers where they play and how they play, getting control of inventory is number 1!

The time is now….and that’s my 2 cents.

Gajendra Ratnavel
Guest
4 years 10 months ago

Certainly this is great news. The adoption of tagging at the source will improve supply chain management and visibility. The back-end software needs to be updated to accommodate as well. It has taken so long, one can only hope the back-end has also been making improvements in this aspects.

In the clothing retail market, RFID can be a great asset in the whole of the garment. For example, if these tags were part of the clothing that cannot be removed or at least, something semi-permanent that the customer does not need to remove, then it can be used in the dry cleaning, caring and tracking. There is a lot of data that can be captured throughout the life of a product.

Gordon Arnold
Guest
4 years 10 months ago

With the many Information Technology (IT) security issues looming in the land of brick & mortar retail there are perhaps more prudent investments for available investment upgrade dollars. The high front-end investment costs are another reason this continues to remain off the table. With so few takers development funds to increase reliability are not being invested to overcome IT management skepticism. Fulfillment and e-commerce companies may see the faster processing speeds as an enticement but the costs still need to be bundled as a part of a advanced program to improve transaction processing with a significant labor force productivity increase. We may see RFID get replaced before it takes off. The next decade will probably decide if this lives or falls to the wayside.

Mark Price
Guest
Mark Price
4 years 10 months ago

The cost of RFID vs. the cost of out-of-stocks has always puzzled me. The case for investment is so clear cut. I am glad that retailers are adopting RFID not only for the benefits of inventory management, but also for the improvement of customer experience as well.

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