RFID use reaching a ‘tipping point’


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.
- RFID use reaching ‘tipping point’ – Fierce Retail
- GS1 US Survey Shows Manufacturers and Retailers Embrace RFID to Enhance Inventory Visibility – GS1 US
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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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.
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.
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.
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.
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.
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.