March 18, 2022
By Adrian Beck
The history of RFID utilisation in retailing is perhaps best described as chequered! From its initial development in the late 1990s, retailing was quickly identified as an area where it could potentially make a revolutionary change to business practices and operational efficiencies. Indeed, it was viewed as such as game changer that one aficionado claimed it would be: ‘bigger than the invention of the computer and possibly the Internet’! Of course, reality has painted a rather more modest outcome and it is only now that it is becoming an increasingly important part of the operational practices of some parts of the retail industry.
One of the reasons for this ‘slow burn’ is that it is not necessarily a straightforward technology to introduce, integrate, manage and gain benefit from – it has many ‘moving parts’ that require careful and constant consideration.
Learning from RFID Adopters
In 2018, the ECR Group commissioned research to better understand what could be learnt from retail companies that had invested in RFID and detailed below are the key lessons that the research summarised.
- Role of Senior Management: The role of the senior management team in both the initiation and subsequent delivery of a RFID project is paramount – without their active support and recognition of the financial imperative, few projects will succeed.
- Choosing a Business Leader: The RFID project leader should ideally have responsibility for on-shelf availability/stock integrity, regardless of where they are located within the business hierarchy.
- Engaging the Business: Successful projects need to work hard at getting cross functional buy in – RFID projects have long tentacles embracing most retail functions.
- Understanding Your Business Context: It is important to understand how RFID will impact on the business. Undertaking detailed process mapping and recognising how products move through the supply chain is key, as is assessing the impact the physical environment might have on the functionality of the technology and how it would integrate (or not) with legacy systems.
- Challenges of Integration: RFID users counselled future adopters to not only take integration seriously but think very early on in the process the extent to which they want new and existing data systems to communicate.
- Seeking External Help: Where appropriate seek external advice: RFID consultancies, technology providers, other retailers, and organisations developing common standards such as GS1.
- Choosing RFID Technologies: Many users adopted a circumspect, modest, and highly price conscious approach to the selection and use of their RFID technologies – the mantra of ‘keep it simple and highly focussed’ was very apparent.
- Tag Reliability: No companies had any concerns about the reliability of their chosen tags; a more prescient issue was ensuring the tag remained attached and its position on the product was optimised.
- Choice of Readers: By far and away the predominate reader technology used is handhelds provided to store staff.
- Avoid Tagging in Store: All the companies taking part in the ECR research had opted for a long-term strategy that involved the RFID tags being applied at the point of manufacture.
- Standards Matter: Standards were highlighted as being key in reducing confusion in the supply chain and avoiding getting locked into any particular provider.
- Undertaking Trials: All companies had undertaken a combination of Proof-of-Concept Trials (does the technology work?), Pilot Trials (how will RFID operate in our particular environment?) and Development Trials (how can we evolve our RFID system?).
- Measuring Impact: Ultimately, RFID is an intervention used to enable the business to be more successful in meeting its core objectives of being a sustainably profitable retailer. In and of itself an RFID system is little more than a combination of technologies that provide the user with actionable data. Most case-study companies had relatively few KPIs they wished to achieve, with an improvement in sales being the most prominent.
- Rolling Out RFID: All companies had committed to rolling out their RFID programmes – a ringing endorsement for how valuable it was to their businesses. Of particular importance was timing – avoiding peak times in the retail calendar, and investing in high quality and sustainable training for retail store staff.
- Loss Prevention and RFID: Few of the companies regarded their RFID system as an effective tool to actively reduce stock loss, particularly malicious forms of loss such as shoplifting. Primarily this was because the tags being used (swing tags and stickers) were very easy to remove and current exit readers were viewed as being relatively unreliable.
- Remember RFID is a Journey: Case-study companies were keen to remind prospective users that RFID systems are not a plug and forget technology – they require ongoing commitment to ensure they remain fit for purpose and capable of delivering the KPIs originally required by the business to justify any recurring investment.
- Keeping it Simple: The final piece of advice many offered was to keep any planned RFID project simple – do not make it over complicated, and remember RFID merely provides data; if you do nothing with it then it is destined to fail.
As with many retail initiatives, it is often better to follow in the footsteps of others that have already carved out a route, unearthed the pitfalls and identified the positives. The lessons detailed above are built upon this premise and hopefully will help businesses that may be thinking about embarking upon a RFID journey do so from a more informed starting position.