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Why More Retailers Haven't Invested in RFID

Is it that they don't understand the value of the technology, are afraid to take risks, or have other priorities?
By Mark Roberti

So the question, then, is this: With these kinds of benefits, why isn't every major retailer on Earth using RFID?

One possible explanation is ignorance. A lot has been written at RFID Journal about the value of RFID. Most retail magazines have given some coverage to the value that the technology has been delivering, but I've read several research studies about the changes retailers face, and most do not mention RFID. They simply stress the need to improve inventory accuracy without explaining how that can be done.

Another reason is that new technologies simply take time to be widely adopted. There is a process that almost all new technologies follow, according to Geoffrey Moore, the author of Crossing the Chasm and other books on the technology-adoption lifecycle. It begins with the birth of a new technology. Then, there is a wave of optimism about what it can do, followed by the realization that it can't yet deliver on its potential. Slowly, the technology matures into a solution to particular problems, and then it takes time to build critical mass, after which the technology crosses the tipping point. At that stage, adoption accelerates rapidly. RFID is currently in the process of building critical mass in retail, and I believe it will do so within three years.

That being said, I believe that one key reason RFID has not been more widely adopted among retailers, particularly in the United States, is an aversion to risk. Investors punish companies that fail to consistently hit their numbers, which makes CEOs leery of investing in any new technologies. Ironically, if a technology is transformational, as RFID is, it becomes more risky to the CEO trying to hit his or her number for the next quarter.

One way or another, however, RFID will be adopted. If existing retailers are unwilling to deploy the technology, new ones will enter the market with new business models that use RFID and other technologies to seamlessly merge online and physical channels, and that will compel conventional retailers to adapt. The only question is how long it will take.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog or the Editor's Note archive.


Kris Hughes 2018-03-01 07:07:25 PM
Great article Mark. I love and agree with your optimism that "One way or another RFID will be adopted."
Robert Amster 2018-03-13 08:15:25 PM
The remaining question is the following: given all the indisputable benefits of item-level RFID implementation, can we prove to the skeptical retailers that the benefits outweigh the cost of implementation?

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