Making the Case for Utilising RFID in Retailing
Making the Case for Utilising RFID in Retailing

December 2, 2021
By Adrian Beck

Some technologies can often be on a very slow burn before they reach a tipping point of acceptability, value, and utilisation. In many respects, the use of Radio Frequency Identification (RFID) technologies in retailing is an archetype of this phenomenon – developing first in the late 1990s but only now becoming mainstream in some parts of the retail world. Indeed, RFID is often put forward as a technology that adheres very closely to the Gartner Hype Cycle, which puts forward five stages of technology development:

  1. Innovation Trigger – the concept and technology is first developed and proposed.
  2. Peak of Inflated Expectations – while some success stories are widely touted, there are many implementation failures.
  3. Trough of Disillusionment – interest in the technology drops off considerably as more use cases fail and initial claimed benefits remain largely unfulfilled.
  4. Slope of Enlightenment – new iterations of the technology begin to emerge, and more companies begin to engage, although many remain hesitant.
  5. Plateau of Productivity – the technology begins to enter the mainstream with more use cases being developed and a broader range of companies adopting the technology.

It is important to remember that RFID brings together two key concepts – the RF component is essentially a conduit/facilitator of data transfer, while the ID element is the unique identification of every single object. This is typically achieved through the application of some form of taggant to an object and then the utilisation of distributed readers to identify them. Some form of data management system is then used to turn the transferred object data into business intelligence.

While RF continues to dominate as the most applicable and cost-effective means of transferring data, not least because of its potential to bulk read data without the need for line of sight, other technologies are emerging, such as Bluetooth. In addition, RF has well known limitations imposed by the fundamentals of physics – objects made predominately of metal or surrounded by metal can be hard to identify using RF, as can objects containing viscous fluids. These types of constraint have led to some sectors of the retail industry being earlier adaptors than others – Apparel being an example of the former while Grocery and the DIY/Home Improvement sector would be viewed as the latter.

Perhaps the most intriguing and important aspect of RFID is the ID component. We are all very familiar with the use of the barcode in retailing – a revolutionary development first introduced in the early 1970s enabling information about an object to be transferred via a printed sequence of black bars on packaging. This made the identification of products significantly quicker and easier, and enabled retail businesses to make organizational changes to pricing without having to relabel products – the barcode identified what the product was and then a centralised database associated a price with it at the checkout. It remains the cheapest and most ubiquitous way in which retailers identify their stock. However, the barcode is a relatively blunt identification mechanism; it provides generalised information about any given product, but it does not offer unique identification – it cannot differentiate between say one tin of beans and another – it just knows that they are both tins of beans. What ID does is offer that degree of uniqueness – every single object has its own identification code.

The Potential Value of RFID

Of course, one of the most important questions to ask when thinking about this type of technology is ‘so what’? Why does it matter that a retailer can identify each item uniquely and do this without the need for line of sight reading? Certainly, in the early days of the development of RFID, particularly at the Peak of Inflated Expectations, extremely grandiose claims were made about the impact it could have on the retail industry (and beyond) – one avid industry proponent even claimed it would be: ‘bigger than the invention of the computer and possibly the Internet’! While such hyperbole has proven to be just that, in the world of Apparel retailing in particular, the benefits of RFID now seem to be very clear. Perhaps the most important is its ability to help businesses better manage and control their inventories, especially minimising the deleterious effect of out of stocks, which can ravage retail sales.

This has become even more important as the rapid growth in Omni-channel retailing has imposed ever greater demands upon stock record accuracy – online shoppers will quickly go elsewhere if their order is not fulfilled because a retailer does not have good visibility of their stock. In addition, retail businesses increasingly need to have transparency of inventory across their organisation, often in real time, to help them remain profitable in an ever more competitive marketplace. What we are seeing from a growing number of use cases, especially in Apparel retailing, is recognition not only of the criticality of having high quality dynamic data on stock inventory, but also the role RFID systems can play in achieving this goal. For some retailers, the Plateau of Productivity is increasingly becoming less a desirable horizon and more an essential destination.

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