Jul 21, 2013At present, radio frequency identification labels are predominantly used for managing inventory on a retailer's sales floor. After goods are purchased, their RFID labels often experience a sudden end of life—either because the point-of-sale RFID device performs the Electronic Product Code (EPC) kill command, or because the customer tears the label off and throws it into a waste bin.
The good news is that at this point, the RFID label has already delivered a substantial return of investment to the retailer, by reducing shrinkage by as much as 50 percent and improving shelf inventory accuracy by 65 percent to more than 90 percent, thereby boosting sales by as much as up to 14 percent, due to product availability. The use of RFID can also enable omni-channel retailing, by providing accurate in-store inventory information, whereby the store functions like a distribution center, enabling customers to place an order via the Internet, and then pick up the ordered merchandise at the nearest brick-and-mortar shop.
The reason for destroying the RFID label shortly after the point of sale is perceived to have its origin in consumer privacy concerns. However, even today, many customers consciously decide to leave the labels on the garments they buy, at least until they arrive at home and are certain they will keep those items.
So, what else could we do with an RFID fashion label?
There are several different categories of consumers, including teenagers, working mothers, students, businessmen and more. Consumers can even be a mix of several types. Most are frequent users of smartphones and tablets, and utilize the Internet as an information source and an instant cure for almost everything. For them, the act of tapping an RFID label on an in-store terminal is no big deal.
What's more, installing an RFID consumer interaction application does not need to be a large investment, nor is it rocket science. There are a number of small ultrahigh-frequency (UHF) readers available that simply plug into a tablet's USB or earphone connection. The fact that only short communication distances are required brings the cost of hardware down to a very low level.
One Label—Multiple Use Cases
Although retailers are currently employing RFID labels primarily for inventory management, they can build upon the installed hardware and software base to offer additional services to their customers, thereby making the business case for RFID adoption even more attractive to store operators. Described below are a few common customer profiles, as well as their respective RFID applications and use cases.
Young and Playful: Collect and redeem loyalty points. Participate in daily store lottery games (for example, shopper number 100 receives a free lipstick set). Provide instant style ratings by posting your opinion about the latest design in the store.
Cool and Stylish Professional: Verify product authenticity before purchasing. Use the stylish jacket from brand XYZ as an entrance ticket for after-business clubbing. Socialize with other XYZ wearers on Facebook.
Working Mom or Dad: View washing instructions. Learn the average shrink rate following the first washing cycle. Save time via self-checkout and paying directly at the RFID kiosk.
Environmentally and Socially Concerned: Learn what a product is made of. Find out how and where it was produced. Download recycling instructions for that product.
All Types of Customers: Are there any special price promotions currently going on? Are there bulk discounts, if you already have a lot of products in your basket? If you couldn't find your size, is it available somewhere on the sales floor or in the back room? See a professional model wearing a garment that interests you. See yourself wearing it. Does it contain any materials you are allergic to?
Get Onboard
It would be a pity to have a big RFID rollout in place, but to use the labels only for logistics and inventory-management purposes. At the end of the day, I am convinced that consumers will embrace the technology as much in fashion stores as they already do in other areas in which life without RFID is almost unthinkable.
Isn't that all far off in the future, you may ask? Well, some retailers are more innovative than others. Don't miss the train.
Kurt Bischof is the global senior marketing manager of RFID tagging for NXP Semiconductors' division in Austria.
