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RFID in the U.S. Retail Sector

Are companies adopting the technology—and, if so, where and how?
By Mark Roberti
Nov 01, 2010I recently received an e-mail from a reader who wrote: "I know that in recent years, companies such as Nordstrom, Target, Bloomingdale's, JCPenney, Best Buy, Macy's, Dillards, The Gap and Abercrombie & Fitch—to name a few—ran RFID pilots. But I have not heard anything since regarding their adoption. Accordingly, I am writing to ask you about the state of RFID among American retail companies. Is the United States following the lead of European adopters, such as Metro? Has American Apparel blazed a trail for other retailers to follow? If they have adopted, when? What kind of ROI are they realizing? Is their adoption at the item level? Who are the major integrators working with these organizations? If they have not adopted RFID, why? These are just a few of the questions to which I am looking for answers."

I will do my best to answer these questions. Some of these companies are not doing a lot involving radio frequency identification.

It's my understanding that after several years of testing, Target did not deploy an RFID system (see Target Issues RFID Mandate, Target, Wal-Mart Share EPC Data and Target Tests RFID for Security). I know the company has attended some meetings recently related to the use of RFID in the apparel sector, but it's probably just trying to gather intelligence on Wal-Mart's use of the technology (see Wal-Mart Relaunches EPC RFID Effort, Starting With Men's Jeans and Basics).

Best Buy also conducted some trials that were successful (see Best Buy to Deploy RFID, Best Buy Eager to Use RFID to Eliminate Checkout Lines and Wal-Mart, Best Buy Spearhead DVD-Tagging Pilot), but my understanding is that the company had a hard time getting others in the electronics sector to join in using the technology. That might change in the next year or two, however, as electronics firms start embedding RFID into their products.

As in Europe, most RFID adoption in the retail industry take place in the apparel sector. Dillard's, Macy's, JCPenney, Jones Apparel and Wal-Mart are all part of the RFID Item-Level Committee, which launched a formal initiative to investigate the benefits of tagging items for apparel suppliers and retailers (see Major Retailers, Industry Groups Launch Item-Level RFID Guidelines Initiative). The member companies are committed to working together to ensure the technology is adopted in a standardized way that benefits everyone, rather than having suppliers tag one way for one retail store, and a different way for another. This initiative, if successful, represents a leap beyond the individual efforts going on in Europe.

There are other apparel retail deployments happening behind the scenes that are separate from the work these retailers are undertaking with suppliers, RFID technology providers and academics. I am aware of some rollouts that I am unable to write about just yet, because the companies involved are not yet prepared to go on the record and discuss them.

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