Home Internet of Things Aerospace Apparel Energy Defense Health Care Logistics Manufacturing Retail

Large Apparel Retailers, Wholesalers See Sharp Rise in RFID Adoption, ROI

A Kurt Salmon survey of 60 European and U.S. companies found that the adoption rate shot up from 34 percent in 2014 to 73 percent in 2016, driven by omnichannel growth and a high return on investment for multiple use cases.
By Claire Swedberg

During the survey carried out two years later, the majority of respondents indicated that their companies had adopted RFID, and many respondents (more than 50 percent) reported that the key drivers for the technology's adoption had included omnichannel requirements, improved promotion accuracy, personalized marketing, better inventory visibility and increased operating profits. The respondents reported that their companies wanted to enable customers to buy products online, pick them up at stores or have them shipped from the nearest location. Fifty-five percent of respondents rated their top challenge as increasing ordering options for their customers.

The survey asked for metrics in specific categories before and after the implementation of RFID. Of those using the technology, the study found that inventory accuracy increased, on average, to 84.5 percent, from 67.4 percent prior to the technology's deployment. Customer satisfaction grew to 71.7 percent, from 64.6 percent. Store out-of-stocks, on the other hand, dropped to 9.8 percent, from 16.5 percent. Profit margins rose from 8.9 percent (prior to RFID's use) to 14.3 percent, while the average markdowns declined by 3 percentage points, to 11.9 percent with the use of RFID.

Customer engagement is an area of focus for respondents. Retailers are seeking ways in which to bring shoppers into brick-and-mortar stores and offer them key benefits for shopping onsite. RFID-enabled enticements can include self-checkout stations, as well as smart fitting rooms and mirrors.

The respondents further indicated that they expect their spending on RFID technology to grow by 22 percent between 2015 and 2018.

However, Kurt Salmon found, the adoption rate was highest for the largest retailers. Only 9 percent of retailers with revenues exceeding $1 billion that piloted RFID have thus far decided against implementation, while 44 percent of retailers with revenues between $500 million and $1 billion did not deploy RFID after piloting it. Of the retailers who have not implemented RFID, 25 percent said cost was the primary factor, while 75 percent indicated that they were still awaiting broader industry adoption.

Many respondents had trouble quantifying RFID's return on investment for such use cases as customer engagement and self-checkout. Half of all those working for retailers that had deployed RFID indicated not knowing what the customer engagement and self-checkout ROI was at the time. Sain predicts that retailers will focus on these categories, as well as measuring the results and additional RFID use cases in the future.

However, Sain says, there are other retail sectors that are not increasing RFID adoptions at such a high rate. For instance, hard line products, such as electronics and various other non-apparel goods, are still adopting RFID at a lower rate. Smaller companies are much less likely to have already adopted the technology.

A full copy of the 2016 report is available online. Kurt Salmon intends to conduct its next RFID-related survey in 2018, in order to further assess the changes in retailers' RFID use and use cases.

Login and post your comment!

Not a member?

Signup for an account now to access all of the features of RFIDJournal.com!

PREMIUM CONTENT
Case Studies Features Best Practices How-Tos
RFID JOURNAL EVENTS
Live Events Virtual Events Webinars
ASK THE EXPERTS
Simply enter a question for our experts.
TAKE THE POLL
JOIN THE CONVERSATION ON TWITTER
Loading
RFID Journal LIVE! RFID in Health Care LIVE! LatAm LIVE! Brasil LIVE! Europe RFID Connect Virtual Events RFID Journal Awards Webinars Presentations