RFID or Radio Frequency Identification is an old technology that has been developed since the mid-20th century. RFID works as small chips (RFID tags), which carry information for a given object, are read using radio waves. The data then is processed and acted upon.
RFID tags can store huge amounts of data concerning each individual item (as compared with alternative technologies like barcode, which can handle only a limited amount of data for groups of items).
Initially, RFID technology was used by the military, but today RFID tags have found applications across industries. The market for these tags is estimated at about USD 24.5 billion in 2020.
One of the biggest users of RFID is in the retail sector. Retailers were fast to implement RFID tags to prevent shop-lifting and a bit of stock management. But then innovations were slow in rolling out – be it due to the 2008 crisis, be it due to rather high prices of RFID tags, be it due to lack of specialised software. This however has changed in the past five years – the prices of the tags are insignificant and software, which makes use of the RFID data is abundant.
The “crisis” consideration is also present, but with a different sign. These days the COVID crisis is more of a catalyst to innovative RFID solutions. Here are the top 5 innovative solutions which use RFID technology in retail:
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The Stores Of The Future
The innovator here is one of the largest retailers in the world – Amazon.
What started as an in-house shop for Amazon employees in 2016, grew quickly to 30 “Amazon Go” stores in the US and UK in 2021.
The idea here is simple – no cashiers, no queues, just pick up the necessary item and go. All the shoppers need to do, is to download their “Amazon Go” app on their phones and just pick up the items they need in the Amazon Go shop and walk out. The purchase is then charged to their Amazon account.
The lack of human contact upon check out in retail stores, gave the technology a boost during the COVID pandemic restrictions in 2020.
With digitalisation taking over all of the tedious jobs, this RFID-powered process could be the solution of the future for retailers, who wish to make the user experience better in their shop, and save on wages for cashiers. Could this be the store of the future? Maybe. We will just have to wait and see.
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Inventory Tracking
RFID does not only benefit the customers directly. It also strongly supports the back-office of retailers. Retailers were quick to realise that RFID can improve their inventory tracking. What was once tedious long-hour manual labor, is now quick and easy. By adding new software solutions to the RFID hardware, retailers were able to achieve much more than just simple inventory checks.
Today retailers have been able to all but eliminate stock inaccuracy (RFID technology has allowed accuracy to increase to 99%). Now it is possible to achieve item-level monitoring of stock, which of course greatly reduces the stock necessary, as well as “out-of-stock” customer dissatisfaction. Real-time monitoring of stock, helps retailers replenish any stock which is running low, thus achieving customer satisfaction and lower inventory costs.
RFID used for inventory tracking has already expanded through the whole value chain. Now it is easy to monitor each shipment or even each individual item from the production line, through logistics, all the way to the end customer. RFID allows for item visibility throughout the supply chain.
This again reduces costs, improves accuracy and customer satisfaction.
The fashion retailer Zara is making the most out of the RFID technology. It monitors each item produced, shipped, shelved, and sold. Whenever just a single item is sold, the RFID-powered system alerts, and the same item, with the same color and size is shelved. Restocking shelves of fast-selling fashion items has never been easier.
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Mirror, Mirror On The Wall
Can your clothes talk to your furniture? Yes, they can.
While RFID tags are still not used on our bodies (as far as the author is aware), they do go into our clothes. Further to the security, logistics, and process optimisation rendered by the technology, this does provide an additional possibility to impress customers. The tags can be read by a … mirror!
MemoMi has identified exactly this niche. The company is transforming the luxury retail market. They have created the Memory Mirror – or rather an augmented reality visualisation platform. After identifying the RFID tag on clothes, accessories, or makeup, the Memory Mirror provides an augmented reality image of the customer using the said items.
Of course, a 360 view is available and changing colors (say, for makeup) has never been easier. The customer can try out products virtually and decide what fits best.
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Easier Customer Selection
By labeling with RFID tags, all items in their stores, the Metro retail chain in Germany, was able to provide a superior customer experience. They achieved this by using “smart cars” which help the customer find the item which she is looking for, and make an easier and faster decision to buy. Metro was also an innovator with the “smart fitting rooms”, where touch-screen displays provided detailed information on the selected item (“reading” it from the RFID tag) and made easy virtual fittings easy.
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Helping The Retailers To Know Their Customers
The RFID technology, enhanced with “smart fitting rooms” and specialised software can help retailers not only to sell their merchandise. They can provide precious information on merchandise that is not sold. This information can help retailers to optimise their stocking orders with items that are selling strong and evade items that are not selling at all.
RFID tech could be implemented only partially – say for logistic optimisation. However, when enhanced with the necessary software, it will become a generator of Big Data for the customers of every retailer who wishes it. This data, is then processed by the retailer into invaluable knowledge about his customers, their preferences, choices, dislikes and what have you.
Though true, that personal data legislation in recent years prohibits retailers from using the personal data after the customer has left the premises of the shop, they do not prohibit them from analysis of the customer behavior without the personal data and distilling valuable insights for managing their shop.
Conclusion
The utilisation of RFID technology in the retail industry has been a true success. Although it has taken some decades for the technology to advance, and the retail sector to truly understand its hidden power, today RFID is recognised as the “technology of choice” of all retail segments.
It has helped the brick-and-mortar shops bridge the gap with online stores, by providing customers a revolutionary new augmented experience, but also by strongly decreasing the cost of storing items and the expenses for offline shopping and making brick-and-mortar retailers more efficient (understand “competitive”).
RFID technology has also added greatly to the customer experience. It may have actually done more than just “bridging a gap”, by bringing in online shoppers to the real-world brick-and-mortar stores just to be able to enjoy the perks of “memory mirrors”, “virtual fitting rooms”, “smart carts” and the like – you just cannot get these online.
