Has RFID Finally Found Its Place in Retail?

RFID technology is finally taking off in retail—in fact, it's being put to use in a variety of ways, some of which might just surprise you.
Published: June 9, 2019

When it comes to online retail domination, using the newest technologies is commonly regarded as a defense strategy for traditional retailers. But could salvation actually be found in an older technology which, at last, appears to be finding its place?

Aside from some false starts and eagerly publicized trials, radio frequency identification technology never quite delivered on its promise to be the next great thing in inventory control. Now it seems RFID might finally be ready for retail and, better still, appears to offer value across a far wider range of applications than those previously anticipated.

RFID Technology: An Omnichannel Essential?
While the prices of tags, hardware and custom enterprise apps for RFID implementation continue to come down, it stands to reason that if you’re considering possible use cases, you’ll want to exploit RFID in any way that optimizes returns. So why limit your business to using it as an inventory-management tool only?

For example, if your enterprise is in the early days of its omnichannel strategy implementation, you probably don’t need anyone to tell you that tracking inventory across multiple channels is tough. Unfortunately, when it comes to omnichannel retailing, poor inventory visibility directly impacts the customer experience, which is why retailers and manufacturers like Herman Kay are prepared to invest in RFID tags for every item that they carry.

RFID is proving invaluable in honoring the promise to provide consumers with the products they want when they want them, using the delivery methods they demand—not to mention fast and simple procedures for returning purchased products.

Enhancing the Customer Experience With RFID
Perhaps, if omnichannel retail had emerged much earlier than it did, the use of RFID would be more widespread today. It’s almost as if RFID was once a technology too far ahead of its time, and that recent changes in the retail environment have exposed its true potential. That potential extends from inventory management and visibility to applications in customer experience enhancement, crime prevention and cashless in-store payment.

It helps of course, that an RFID device (tag) can be attached or built in to just about anything—a fact not lost on forward-thinking enterprises experimenting with RFID-powered customer relationship management. In fact, in April 2019, Swiss outdoor brand Mammut announced its latest RFID initiative that is set to redefine both its supply chain management and customer experiences (see Mammut Uses NFC to Engage Customers). With the new technology, the company is hoping to raise the bar of its point-of-sale service and add value to customer interactions with the ability to uplift loyalty programs and feedback processing long after the purchase.

A New Way to Pique Consumers’ Appetites
RFID is finding more innovative use cases. As shown in Accenture’s “2018 RFID in Retail Study,” 27 percent of the companies named “pressure to enhance personalized marketing” as one of their top challenges that they hoped to address by adopting RFID.

For this, retail brands set up RFID-powered loyalty programs, using tags built into loyalty cards or attached to members’ phones. These tags alert staff members when loyalty program members enter the retailers’ outlets, allowing sales associates to call up sales histories, welcome customers personally and make recommendations based on their previous purchases.

RFID in Provenance and Profit Protection
Retail shrinkage, which includes losses from shoplifting and employee theft, reached a total of 1.33 percent of sales in 2018, according to the National Retail Federation. In this light, some retailers are turning to RFID technology as a way to combat theft, a task for which the technology is particularly well suited. Vastly superior to the Sensormatic tags used by most retailers, RFID tags can be used in the same way—to set off an alarm if an unpaid-for item passes through the exit door—but also to provide real-time intelligence as to what that item exactly is.

However, theft isn’t the only security issue that RFID tags and readers can help to thwart. In the apparel and fashion sector, counterfeit products are a huge issue, making up almost half of the global counterfeit industry. High-end retailers are responding with RFID tagging at the source to prove product authenticity and combat counterfeiting. This is being made possible by the latest developments in tag construction, which gives manufacturers the ability to produce tags that can withstand being washed and dry-cleaned, and just about anything else which might happen to an item of clothing after purchase.

Taking Convenience to a Whole New Level
Interestingly enough, while retailers in North America use radio frequency technology to stop people from taking goods when nobody’s looking, Japanese retailers are happy to use RFID to help them do so. No less than five convenience store chains in Japan (including 7-Eleven) are ready to implement an RFID self-checkout system for all products by 2025.

When used for automated checkouts, RFID solutions are able to detect shoppers’ purchases (without the need for individual item scanning), display the total to pay and then record their payment by cash or card, before finally issuing a receipt. The entire checkout process takes place within just a few moments and with no intervention from the sales staff.

Who Needs Cash When You Can Pay by Radio?
The new solution in Japan might not represent the self-checkout utopia of the future, since shoppers must still present their purchases at an automated counter, and there’s no seamless, over-the-air digital payment process. Yet for consumers, it’s still a huge step forward from lining up and waiting for items to be scanned individually.

As self-checkout adoption increases, it’s hardly stretching the imagination to assume that before long, dynamic price tallying and cashless payment processes will mean shoppers won’t need to go near a physical checkout counter or pay station. In fact, they probably won’t be able to find such a thing even if they wanted to.

Is Your Retail Business Ready for RFID?
When considering RFID implementation, most retailers naturally think first about inventory visibility and management in the supply chain, in the stock room and on the sales floor. It’s becoming apparent, though, that after many years in the shadows, RFID is ready for retail and offers advantages in security, customer service, omnichannel distribution management and in-store payments.

Will your retail enterprise be implementing RFID technology anytime soon—and, if so, what applications appeal the most? Do you see tagging as a good way to beat counterfeiting, or would you worry about the risk of cloned tags?

Darya Shmat is a business-development representative at Iflexion, where she expertly applies 10-plus years of practical experience to help banking and financial industry clients find the right development or QA solution.