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The Renaissance of RFID Among Retailers

Top retailers are tagging billions of items, and a ChainLink Research study finds that those capitalizing on RFID are realizing a sizeable operational, financial and customer-satisfaction advantage.
By Randy Dunn

RFID Best Practices
As RFID implementations are evolving, the research team also sought to learn more about lessons learned from projects that stalled or were cancelled. When asked why an RFID program was cancelled or halted, respondents cited among their top reasons a lack of well-defined use cases, a lack of executive support and other competing business priorities. This finding underscores the importance of selecting use cases and deployment plans that yield the most rapid return on investment (ROI), so that benefits are large enough to win against competing uses of capital and other initiatives that consume management attention.

One common thread among successful implementations is that they usually start with the area of fastest ROI. According to the research, for most retailers, this is a focus on products with "high mix complexity," such as style-, color- or size-intensive items, including apparel and footwear, inkjet cartridges, certain cosmetics, fragrances and certain sporting goods. What these categories have in common is the need to keep many variations available on the sales floor, so that when a customer walks through the door, items of the correct product, color and size are in the proper place at the right time. The primary driver here is an increase in sales resulting from on-floor inventory availability and out-of-stock reduction. RFID ensures increased inventory accuracy and visibility, appropriate merchandise allocations, and timely replenishment alerts to drive these results.

According to ChainLink Research's Grackin, "Perhaps the most important step forward for RFID among retailers has been the end users' accumulation of expertise and deftness in understanding the different uses and the ability to derive a compelling ROI. They have realized that ultimately, success is not about the technology, but understanding what to do with the visibility, providing accurate new data, capabilities and insights—what business and process changes can be made that have the most value for a retailer's particular set of products and operating model. The real growth in adoption occurred as retailers realized significant value from item-level tagging, especially accurate inventory visibility, improving on-floor availability at the store. This has driven the implementation of RFID on billions of items among many of today's top retailers. As a result, they are realizing a sizeable operational, financial and customer-satisfaction advantage over competing retailers who are not using RFID."

Research confirms that new life has been breathed into RFID, and that retailers capitalizing on this opportunity are winning the hearts (and wallets) of customers around the globe. There has been no other new technology in many years that offers retailers the broad range of benefits RFID provides. Those retailers not currently considering RFID will find themselves struggling to compete as the RFID renaissance gains momentum.

Randy Dunn is the director of global sales and professional services at Tyco Retail Solutions.

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