Observations from NRF’s Big Show, Part 2

By Mark Roberti

RFID is gaining mindshare among retail technology providers, as well as more end users.

Read part one of this article here.

It would be a gross exaggeration to claim that radio frequency identification was the story at the National Retail Federation (NRF)'s annual Big Show conference and exhibition, held earlier this month. But having attended virtually every NRF event for the past 15 years, I think it's fair to say that RFID was more noticeable than ever before.

Years ago, when RFID was still in the early stages of the Gartner hype cycle—meaning it was being hyped—vendors such as Intel, IBM, Microsoft, Oracle and SAP all offered demonstrations of the technology at their booths. Then, when RFID moved into the Trough of Disillusionment (or the chasm, if you prefer Geoffrey Moore's term), RFID virtually disappeared from the big booths at NRF.

This year, for the first time, it was back. IBM had a small area featuring RFID, as did Intel, SAP and Microsoft (Intel has included RFID technology at its booth for the past three years). The one outlier was Oracle, at whose booth I didn't see any RFID demos. One person working at the booth, in fact, told me, "RFID has never come up when I'm on a sales call with a retailer."

I didn't get the sense that attendees were intensely interested in these RFID demos. There seemed to be a greater awareness of the technology among those in attendance, but the vast majority of retailers still don't seem to understand the value that RFID delivers.

There was a lot of interest in data analytics and omnichannel solutions, but it's hard to see how off-the-shelf solutions will deliver much value if a retailer is not using RFID. I noticed one kiosk demo, for example, at which customers were able to order products in a store and have it brought out for them to buy. "The kiosk will tell you if the item is out of stock and recommend a similar item," the person performing the demo said.

"How does the system know how many are actually in the store?" I asked. The presenter replied that it accesses the inventory-management database. I pointed out that such databases are typically only 65 percent accurate, so it's likely the kiosk will tell a customer it doesn't have something that is in stock, or that it has something that is not. The presenter got annoyed with me and moved on.

I think some retailers, too, would just like to move on. "Let's buy some software and have it solve our omnichannel issues," they decide, "or help us to analyze our data in ways that drive greater revenue." There are probably some incremental benefits that can be achieved by deploying these solutions without RFID, but not much. Analyzing bad data rarely delivers a good result. And the only way to perform omnichannel retailing effectively is with RFID.

During a panel moderated by Avery Dennison RFID's Francisco Melo, Dr. Bill Hardgrave, the dean of Auburn University's Harbert College of Business and founder of the RFID Lab, mentioned that he worked with a retailer that keeps only a few items of each stock-keeping unit (SKU) at its store. The company exposes inventory to customers shopping online only if it has more than two of a particular SKU in stock. As a result, only 40 percent of that retailer's SKUs are exposed to online customers. If it were to change that to more than one item instead of two, that would double the number of SKUs exposed—that is, 80 percent of SKUs would be exposed rather than only 40.

If the retailer were to deploy RFID, it could have absolute confidence in its inventory, and could expose inventory even when only a single item was in stock—in other words, it could expose all of its SKUs. What good is omnichannel software if you don't have enough confidence in your inventory to expose your products to customers shopping online or on their smartphones?

Overall, I think the event showed that retailers are starting to get radio frequency identification. However, the RFID industry still has a lot of educating to do.

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, the Editor's Note archive or RFID Connect.