2018 – the market witnessed a rise in cost optimization and better service as essential components of the retail supply chain. With the massively growing demand in the retail landscape, there is an urge for material availability, service and increasing competition. Due to the speed in goods flow, higher levels of automation and ever decreasing price and size of tags. Moreover, it improves the importance and relevance of RFID technology in worldwide logistics. We are living in an area where RFID is destined to replace the traditional barcode. Therefore, it forced global competition amongst retail stores to rethink how they provide appropriate services to consumers to maintain their place in the market.

RFID Adoption Is Gaining Momentum

RFID technology is enabling retailers to become more agile and knowledgeable about their consumer’s needs. Retailers are showing examples of adoption to the ever-changing needs of today’s empowered consumer. Moreover, RFID technology is playing a more intricate role in the core of IT projects. Omni-channel and Customer-facing Initiatives have become the primary drivers of RFID adoption.

Retailers are adopting RFID technology for real-time inventory management, and thus it is quickly becoming a prerequisite for Omni-Channel retailing. Retailers must know what merchandise is in stock and where so that they can efficiently source the necessary items for a customer order and ship them from a single location or reserve it at the nearest store location. In an Omni-channel world, RFID is enabling retailers to deliver on their promises to consumers.

Loss Prevention

Today, Loss Prevention leaders are following suit – implementing RFID to protect internal theft, counterfeiting, and spoilage. RFID allows Loss Prevention to also secure high-risk merchandise to maintain and keep records of moving items on the floor. But for Loss Prevention it does not stop there. Loss Prevention professionals also build RFID infrastructure into a new store. Also, they help to remodel as part of the construction plan to complement the store theme or design.

RFID is also widely being deployed in apparel to improve shelf availability of complex SKUs. This trend is quickly gaining traction in other retail formats, as retail formats continue to merge. Moreover, RFID readiness has more to do with the merchandise sold than the primary format of the retailer.

This is leading to high competition in business operations and ever greater consumer demands for information on purchased items requiring traders to implement new technology trends in their retail sales. RFID was abuzz over the years, but now it’s a fast-growing technology with an impact on speeding up business processes. With the concept designed as an alternative to linear codes, application of the RFID technology is going to replace business line models in the coming years.

Benefits of RFID

RFID improves inventory accuracy by 25.4%—retailers studied reported 67.4% inventory accuracy before RFID and 84.5% accuracy after implementation. But that’s not all, RFID improved customer satisfaction by 11.0%, reduced out-of-stocks by 40.6%, cut shrinkage by 33.7%. Moreover, it most importantly boosted profit margin by 60.7%.

Given these remarkable results, it is no surprise that 85% of respondents are using RFID for improving inventory accuracy. Also, the same goes for retailers and wholesalers and across all categories (basics, footwear, fashion and accessories). Beyond inventory accuracy, retailers and wholesalers in three out of four categories indicated that supporting omnichannel was the second-highest factor. The only variance in the data came from accessories, which reported increased benefits from reductions in time and labour.

In fact, the global market for RFID technologies should reach $16.2 billion and $38 billion between 2017 and 2021. Companies now realize other potential uses of the massive amounts of data associated with RFID that go beyond identification tags. RFID is an enabling technology that can be used to grow an omnichannel and customer-centric environment.

Not only does inventory inaccuracy cause lost sales of 8.7%, but it’s also a critical factor in the ability to effectively execute an omnichannel strategy. If inventory accuracy is not well above the industry average, retailers will struggle to successfully implement omnichannel initiatives because they’ll be unable to cost-effectively meet customers’ demands for “buy anywhere, get anywhere” shopping.

Given these impressive benefits, why haven’t all retailers implemented RFID?

Holdouts are primarily smaller retailers, some of whom struggle to realize the benefits of RFID thanks to high implementation costs. In contrast, 76% of retailers with revenues over $1 billion have implemented or are implementing RFID. However, 87% of retailers with incomes of more than $5 billion already have. Overall, 25% of retailers who haven’t implemented RFID said cost was one of the biggest reasons why. Also, 75% said they were waiting for broader industry adoption.

Retailers who wait on RFID will not only see the same levels of inventory uncertainty and out-of-stocks going forward. They’ll also fall increasingly behind their competitors when it comes to the more advanced applications of RFID implementation. Moreover, RFID users will improve customer experience–supporting initiatives like interactive store elements.


Written By: Ranjeewa Dias

Business Technology Manager