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RFID Solutions Are in the Spotlight Once Again

The pandemic has changed much of the retail landscape and businesses will need to make immediate decisions about the future of the industry. Bringing back the workforce while protecting the health and safety of all employees is certainly the first step, but it’s time retailers reimagine store operations across the board.  

Today’s consumers want accessibility, convenience, and are more receptive to changes that make in-store shopping as safe and enjoyable as online shopping. In the last 18 months, we’ve seen “dark stores” pop up around the country that serve as distribution points and fulfillment centers, curbside operations, and more e-commerce opportunities than ever before. 

Alongside all of these changes modern technologies, which have made it easier to bring products to customers in remote settings. Further, they allow retailers to improve operations and reduce costs—two developments that are possible with RFID, or radio-frequency identification solutions. 

According to McKinsey and Company, RFID has the potential to improve stockout management and shrinkage reduction by 5% while achieving a 10%-15% reduction in inventory labor hours.


RFID technology isn’t what it used to be

Improving the omnichannel experience is a must for retailers in today’s market and stores can no longer sit by while competitors shift their fulfillment and distribution strategies. Stores remain the most lucrative fulfillment option for the apparel and grocery industries, but compromises to the in-store experience were made during the pandemic and that’s challenged retailers to rethink their systems, processes, and priorities. 

Nobody should expect a one-size-fits-all solution, but analyzing inventory systems and making changes when needed is key to becoming more sophisticated, unified, and precise. RFID is a familiar technology for most retailers, who would have seen it used years ago as a means to store and share information about individual products. 

Without proper RFID infrastructure during the last few decades, the technology went through an incubation period that lasted until just recently. With improvements in cost, readability, and range, RFID may prove to be a driving force behind data-driven, accurate shopping experiences. 

Outside of grocery retailers, RFID technology will take us into the next generation of brick-and-mortar if industry leaders find ways to harness its unique properties. 


RFID is more complex than what meets the eye

RFID isn’t simple, and retailers will need to consider its four main components if they want to fully understand what the technology can do for them.  

First, RFID tags are programmable tags fixed to products. They store and transmit information about particular products. Second, reader hardware sends and receives short and long-range signals that interpret encoded data from a tag. From here, antenna hardware identifies a tag’s ID, presence, and location. 

Third, supporting software encodes tags and processes RFID data for end use. This is either done through proprietary software or third-party apps, as retailers have many options when it comes to engaging with collected data. Fourth, the testing and certification process helps retailers certify tags and provide supplier assurance before products are put on shelves. 

No doubt, making sure all of these components come together in a synchronized fashion takes a lot of time, collaboration, and finesse. However, we’re seeing RFID make it’s way into the omnichannel experience and many retailers can’t ignore it anymore. 


Why RFID is a game changer

One of the reasons RFID isn’t entering another incubation period is due to its price. The average cost of an RFID tag has dropped by 80% to just 4 cents in the last 10 years. RFID readers have also fallen in price to 50% of what they once were while their read accuracy has improved by 100% and range by 400%. 

This is to say that modern RFID technology can have a big effect on store economics—boosting revenue and lowering costs. RFID developments are also happening behind the scenes so that these percentages keep rising. 

Researchers at Auburn University’s RFID lab are working on secure and consistent frameworks that share RFID data across stakeholder supply chains. For retailers, this means accelerating the process to becoming fully omnichannel while responding to supply chain hiccups in real time. 

Furthermore, RFID technology has growing potential when it comes to addressing consumer needs in the wake of the pandemic. Contactless-checkouts, cross-sell opportunities, and more personalized customer experiences are all possible with this evolved technology and essential in today’s changing marketplace.  


RFID means more efficient inventory management 

Practically, RFID solutions fall into just a few use cases—inventory tracking, store operations, and the customer experience. These use cases are not only less effective without RFID solutions, but diminish the entire end-to-end experience when they’re not supported with versatile technology. 

Inventory tracking is a top priority for many retailers, and for good reason. Managing inventory is a lot more efficient when accurate product-location data is available and that’s true across the board. Additionally, low-cost inventory management, packing and delivery boost customer customer satisfaction levels as these processes affect the entire supply chain. 

More specifically, RFID provides highly accurate data regarding a product’s position in the supply chain. Retail managers can easily adjust product arrival times, customer requests, and store replenishment when they know if a product is on the truck, in a particular store, or on a specific shelf. 

CEO of lululemon athletica Calvin McDonald noted: “we can access product at any point across our network, not just distribution centers but at our stores as well [as] from ship from store.” The retailer found enormous success using inventory tracking during the pandemic, boosting their inventory accuracy to 98% across their network of 500 stores. 


Store operations look different in the wake of the pandemic

Decathlon, a retailer with more than 1,600 stores, tags more than 85% of their products with RFID and has tripled their labor productivity and raised their revenue by 2.5% because of it. The retailer is a proud example of how RFID tags can cut costs while boosting revenue and productivity within their stores. 

To further improve store operations in the era of social distancing, Decathlon introduced a “scan-and-go” solution for all of their Europe locations so shoppers could scan and pay for products using their smartphones instead of waiting in a checkout line. When social distancing was more important than ever, giving customers contactless checkout options gave Decathlon a competitive edge over retailers who had yet to find unique health and safety-related solutions. 


RFID improves personalized experiences 

RFID technologies also improve personalized experiences for customers who expect more from their retailers during the digital transformation. “Smart” fitting rooms are one example of how RFID helps personalization come to life through customized information and personalized recommendations regarding garment sizes, colors, and styles. 

Fitting rooms of this caliber are available in select Chanel brick-and-mortar locations. The retailer collaborated with Farfetch to create RFID-enabled fitting rooms that give customers product details, style recommendations, and brand deals all from within the room.

Personalization has been around for years, but modern technologies like RFID allow retailers to collect more data and analytics than they were able to in the past.  


Retailers have a lot to gain from RFID technology 

Industry leaders were faced to make large, long-term adjustments during the last 18 months, but opportunities in the form of RFID and other technological advances can make up for lost ground. RFID has the capacity to impact a retailer’s profit margins and product management abilities, but it can also alleviate some of the pressure put on by the current marketplace. 

Retailers who want to adapt to the current climate will need to adopt an end-to-end approach that’s guided by cross-functional leaders and an agile mindset. Specifically, leaders cannot expect RFID to work flawlessly on day one—rather, the technology requires constant attunement and iteration. 

Moreover, retail store owners have access to an increasingly affordable technology that’s going to help reimagine the brick-and-mortar experience. Should they take advantage, consumers can expect more efficient store operations, product remplemishments, and personalized experiences.