Modernising the retail sector with Radio Frequency Identification
Radio Frequency Identification (RFID) is a tracking technology that uses a scanner or reader to collect data from ID tags or chips which can be attached to a wide range of products.
RFID technology has existed since the 1950’s and we’ve been making RFID devices for library services provider Bibliotheca since 2005, but the massive potential of the system is only just starting to be recognised by retail businesses. Currently used by retailers for functions such as stock accuracy and identification, RFID can be deployed in a retail environment in a wide range of ways.
RFID systems use a tag and a reader to record specific information. Each tag has a unique fingerprint and can be used on price tags, stickers or embedded into the item itself. The reader can be stationary or handheld and can vary in strength and size depending on the purpose.
In the past few years RFID has become a popular topic for retail transformation discussions and the success of high-profile adopters including Target and Marks and Spencer has raised awareness of the opportunities that RFID presents.
One of the reasons that RFID is gaining momentum in retail is that consumers are shopping in lots of different ways – online via desktops, tablets and mobile and now through apps and social media. These additional channels are putting increasing pressure on the supply chain which makes visibility of stock crucial to fulfilling customer expectations. RFID tagging creates the ability to instantly locate an item and make it available for purchase or delivery.
One of the main business barriers to full inventory RFID deployment was the price of the tags, but the cost per tag has reduced by 75% in the past five years, making it feasible for retailers to tag all but the cheapest of items.
The cost of purchasing and implementing the hardware has also reduced, with the price of readers and handheld scanners now relatively low, and the set-up costs involved becoming more competitive as more providers enter the market.
With RFID now embedded as the future of supply chain and inventory, more opportunities for retailers to use this technology now present themselves. We’ve looked at the benefits of RFID for retail and the many added value uses that store owners can use to enhance their customer experience.
The widest recognised benefit of RFID tagging and scanning for retail is currently stock accuracy. Adding tags to all of your inventory at warehouse or even manufacture level create opportunities to take stock accuracy to around 98%, based on River Islands’ experience, and means that retailers not only know what items are in stock, they can also pinpoint where it is.
This level of accuracy for stock also means that stores can use Artificial Intelligence (AI) to ensure each location has the exact range of sizes and styles to meet their primary customer needs based on past sales and common trends. Meeting customer demand can help increase spend by 5%+ and increase competitive advantage – if you stock similar items to nearby stores, the customer will usually buy the product where they can find it.
If the customer finds a product that they want to buy but it’s not in stock, RFID can also be integrated into mobile and in-store ordering devices to locate the item at another store or warehouse and have it delivered to the customer’s home address, sometimes the same day. This function is particularly useful around holidays, sales or peak times when products cannot be restocked straight away.
These next-level applications for RFID help to improve the customer journey on many levels – once products have their unique RFID tag, the responsive uses for it are manifold.
Automation with RFID presents the possibility to redeploy staff from stock or fulfilment roles and improve in-store customer service with more responsive, personalised approaches.
Simple actions like price checking and product comparison can be completed by customers at self-service points fitted with RFID readers.
Tags can replace barcodes for payment and make self-service straightforward and fast. Products would no longer need to be scanned manually and individually – a local RFID reader would recognise the entire basket at the same time, cutting down queueing time and reducing staff input.
In addition to the huge opportunities that RFID presents in terms of inventory, data and automation, there are also a wide range of customer experience-enhancing possibilities:
Using RFID tags to track a customer’s journey through a store can provide valuable wayfinding and retail design data. Because of the way RFID signals are tracked, once an item is picked up and carried around the store, we can see whether a customer buys an item they have taken into the changing room; whether they swap it for a different product later on and identify common paths taken before making a purchase.
With one eye on data protection and privacy, the technology exists to use already embedded RIFD tags in apparel at post-purchase and aftersales level to track repeat visits to stores and collect data on what customers buy next. If the customer supplies their email address, the data can also be used to suggest when items might be ready to replace (e.g. a running shoe past peak performance) or upgrade (handbags, coats, wallets).
Using a smart mirror equipped with an RFID reader in fitting rooms presents a fully interactive experience for customers – automated product suggestions or recommendations, and the opportunity to request different sizes or colours without leaving the fitting room.
RFID tags and readers can be used at the checkout stage to streamline the payment process. For ecommerce and omnichannel strategies, RFID can be incorporated to increase payment options and enhance click and collect services.
RFID tags can replace chunky plastic security beacons as readers can be fitted to security gates for a low-impact alternative. This is particularly useful for products that have been difficult to fit with a security tag such as bottles or large items.
Designing digital signage content to respond in a specific way according to the action the customer takes when browsing product means that adverts or information can be displayed in exactly the right place at the right time.
Given the numerous benefits of deploying RFID technology in retail, it seems strange that it is still not widely used. So what are the barriers to implementing RFID as part of your digital transformation strategy?
Knowledge and understanding: Until recently, the technology was not widely understood. Due to the scale of the change to processes, collecting and distributing enough accurate information about how the systems worked was too much of a challenge for large retailers who could afford to use it, and too cost prohibitive for smaller retailers who couldn’t.
With several high-profile success stories and hard facts around the benefits, retailers can now see that RFID is the future of in store experience, supply chain and retail data.
Integration: The deployment and management of RFID has usually sat within the Loss Reduction team at large retailers. Ringfencing the technology to the supply chain with a focus on avoiding lost sales and missing stock has meant that the additional features have been missed.
Complicated back end inventory systems and supply chain management has also meant that retailers are reluctant to upset the status quo. With a potential uplift in stock accuracy of 30%, however, the saving and process improvements that RIFD present now outweigh the pain point of implementing it.
To ensure the success of introducing RFID to retail, integration must be studied at the beginning of the process and considered from every angle. Integrating new RFID data with existing systems has been cited as the biggest challenge by companies now running successful schemes.
Cost: The cost of both the tags and readers has reduced in recent years, but that information is not yet widely known. The ROI for these systems now outweighs the initial investment.
Unsuitable products: There are some products that don’t work well with RFID technology. These include items that are very dense (which interrupt the scanning process) or those which incorporate large amounts of metal (which creates interference) but there are specialist options in development for these types of products so as long as you choose the right range of RFID products you won’t need to worry about this interference.
Many UK and US retailers are already using RFID to great effect to manage inventory and increase sales.
In the UK, Marks & Spencers have been using RFID tags to manage and track clothing since 2003. Pioneering the use of RFID in the UK for supply chain, Marks and Spencer deploy more than 400 million tags per year and have reported an increase in sales of up to 5.5% through improved stock availability. In the past few years, M&S have also rolled out RFID to non-clothes items including cosmetics and homewares, with a goal to have 100% inventory tagged by 2020.
Also in the UK, leading high street retailer River Island have deployed RFID tags to all items at warehouse level to increase their stock accuracy figure to 98%, ensuring that their most popular items are always in stock and available to buy.
In North America, Lululemon have used RFID technology to great effect, establishing visibility to every single item of their luxury exercise and lounge wear, pinpointed where items are located in their stores and distribution centres, and as their system is updated every five minutes, the information is available in real time.
US retail giant Target has used RFID technology since 2015 to record, track and supply stock across apparel and home. The tags and devices help to find products quickly at any location and either deliver it directly to the customer or prepare them to be collected in-store.
Implementing an RFID strategy for retail may be complex but as we’ve shown, the benefits of adopting RFID now are huge. Retail experts agree that the question is no longer whether to adopt RFID, it’s when.
To find out how to introduce RFID enabled technology to your retail store, talk to our team today.