It’s RFID’s Turn

By Vitor Villela

Understanding this technology should be the retail sector's big bet for 2020.

Radio frequency identification is one of those technologies that has been in evidence since its inception, and it is now gaining traction as one of the retail industry's biggest bets for this year. In the early 2000s, many companies viewed RFID deployments as an opportunity to improve operational efficiency by replacing conventional barcode scanning with readability using passive RFID readers and tags. But the high costs of labels made many such projects unfeasible, and the technology proved to be a passing trend for most.

Nearly two decades later, with the popularization of RFID tags and the closer look many have taken at the applications and benefits that this technology brings to retailers, RFID has become part of discussions in executive committees for deployment and rapid adoption across the board. RFID improves logistics and in-store processes, prevents sales disruptions, increases sales and boosts the customer experience, both inside and outside of stores.

There are numerous benefits that RFID brings to businesses, and the technology should be retail's big bet this year. I will highlight some of the reasons why below:

• Sales breakdown: One of the main pains for retailers these days is the sales breakdown caused by inaccurate inventory and the consequent difficulty of knowing which specific items are missing at stores. Since retailers currently only take physical inventory counts once or twice a year, and since the lack of information about missing products is only realized after this activity is performed, RFID is a major ally in alleviating this problem, as it allows counts to be performed daily. This enables companies to more efficiently identify which sizes and items required replacement, thereby ensuring product availability in-store.

• Product availability at the point of sale: One example of how RFID has evolved in recent years is the ability to track the entire logistics chain, from manufacturing to in-store sales. If a product is tagged at a manufacturing site with an RFID tag, a retailer has more accurate data and can be responsive to receiving items at distribution centers and stores, dramatically reducing the time required for goods to be effectively available for sale. This reduction can dramatically improve retailer cash flow and sales planning, and it allows for customized store deliveries, depending on seasonality or region-specific demands.

• Theft prevention (internal and external): As technology enables an anti-theft solution integrated with a point-of-sale system, the resultant data visibility, coupled with integration with other technologies, can contribute to loss reduction and detect where in the production chain goods may be stolen. With data, control and product visibility in-store, retailers can design burglary-prevention strategies specific to each department within a store location, or at each step between production, distribution and store.

• Omnichannel: The concept of omnichannel retailing, so prevalent and commented on in recent years, can be achieved more quickly using RFID technology, as it provides accurate knowledge of all inventory. The omnichannel concept allows consumers to pick up items purchased from the Internet in-store, thus increasing the flow of shoppers at stores and meeting the demands of customers more quickly and efficiently.

• Improved customer shopping experience: With RFID technology, product availability increases and cashiers can complete transactions more quickly. Queue times are thus decreased and stockouts can be eliminated. When stores become omnichannel-ready, the consumer experience tends to improve. As a result, retailers can expect to increase customer loyalty and boost sales.

Those who bet that RFID was outdated were wrong. Retailers that have real-time product tracking, inventory visibility and in-store item tracking can create better customer experiences and lower operational costs. There are numerous features and services available these days that can significantly improve a retailer's bottom line. In such a tight-margin industry, it is worth looking for possible mechanisms to minimize unnecessary expenses and increase revenues. RFID is undoubtedly an alternative for retailers to consider. However, its application must be carried out precisely.

It is necessary to find a supplier that knows well the demands of each customer and has the ability to deploy technology on a large scale. It is in this context that a systems integrator stands out. After conducting a thorough analysis of a retailer's unique context and environment, as well as mapping the entire ecosystem of the RFID scenario, from label, printer and software vendors—including the infrastructure, readers and antennas required—an integrator that has experience with large-scale deployments and monitoring can create a solution designed to meet that retailer's specific needs. Such an integrator can compare the various players and, in an agnostic way, consider what is best for that retailer and for its customers.

RFID alone is no miracle. But when integrated well with other technologies, it can deliver incredible results within a short span of time.

Vitor Villela is a senior solutions architect at NTT Brasil.