RFID in Retail

Radio Frequency Identification (RFID) is one of the major automatic identification technologies used for tracking people and objects. It uses Radio Frequency waves and is a wireless identification system. RFID is superior from other Automatic Identification technologies like Bar codes and Retinal scanners because there is neither a need of manual contact with a reader nor is there a necessity to be in the exact line of sight of the reader.

One of the Major sectors where RFID has found application is the Retail Sector. Anti-theft check of the various portable commodities by scores of industries is a major area where RFID finds genuine scope today. RFID for retail first came into limelight in 2004 when Wal-Mart declared their interest in using the technology. Wal-Mart made their 100 odd suppliers apply RFID tags on the products for delivering goods efficiently. This technology then took off on the retail floor with store items being tagged and controlled through RFID technology .

Thus the major application base of RFID in retail is in managing the products in the retail store.  Then there are other peripheral applications like Supply chain management and Payment control in stores. This could include detecting the defected materials. Thus RFID performs asset management, Payment control and Supply chain management. For example, for a cargo entering a field within the RFID range, the RFID would give specific databases regarding the cargo’s contents. This would lead to fast data generation and storage. It would also enhance the quality control of supplies.

Then RFID does asset management in an arranged way keeping track of all products. The received, quality controlled, supplies can further be arranged through RFID. Moreover the security of such product can increased multifold times due to secure tracking of products. Payment systems at retail stores can also use RFID as a more convenient and comfortable method. It reduces the use of bar codes and plastic money which may not be secure enough. RFID makes the payment secure, reduces congestion and helps in eliminating false dealings.

Benefits of using RFID in Retail

RFIDs provide efficiency and Traceability in the Retail sector. It is a device that leads to substantial profit by proper asset management.  RFID is the newest innovation seen in the retail sector which promises wonderful benefits such as:

  • Error Control – RFID increases efficiency of scanning data. Error generation from the RFID technology is minimal as it does not depend on reader being in Line of sight of the tag.
  • Feedback due to Traceability and Visibility – RFIDs can be used in generating comments and opinions. RFIDs are traceable devices. Being traceable, the company can use the RFID database to get an idea about the views of their customers.
  • User Friendly – RFID installation is easy. It is also easier to read the tags by RFID than by normal Bar code readers. Also the read information can be stored and networked with ease.
  • Inventory losses are prevented – The RFID technology leads to an accurate inventory. RFID helps in locating as well as measuring the number of objects present at a particular place. Thus money is saved through a proper and accurate inventory. A proper Inventory is beneficial for retail sector which works on demand supply regime.
  • Locating Moving Goods – Tracking movable goods and increasing their security is made possible efficiently with RFID. The RFID tags have the ability to trigger alarms if tampered. Objects are secured throughout due to the objects being tracked.
  • Increase in Automation – RFID leads to lesser need of manual work and labor. Not only does that lead to increased efficiency but it also reduces labor costs.

Limitations of RFID for retail industry

RFID in retail has its share of limitations. Being a technology which is seen as a new innovation, there is a hesitation in implementation. There are also various incompatibility issues with the payment of money and processing of information on the tags. The RFID Readers available in the retail outlet may not be congruent with the tags on the various apparels and objects. High costing due to low demand, security concerns, inaccurate readings leading to improper billing are other limitations RFID suffers from .

  • Practical Glitches – RFID may render inaccurate databases because of various technical and implementation problems related with the implementation of the device. In retail, this may imply time lapses, wrong transaction rfid in retailrecords and customer dissatisfaction. Some of the key causes leading to lower efficiency are given below. Though these inaccuracies are steadily decreasing with rise in innovative technology, it still poses as a bug for RFID in Retail.

    • Tag collision-where there is competition among tags,
    • Reader Collisions-where there is competition among readers reading a single tag
    • Jamming of systems altogether because of external devices
  • Affordability – Since the demand for RFID technology is low, RFID systems have high costs attached. The technology is majorly young. This issue can only be sorted out by an increasing demand. From the past usage patterns, through increasing demand the prices should reach an attainable level.
  • Privacy concerns and security – A major setback of RFID is that the flexible style of reading can be intercepted. The tags can mostly be read by anyone who possesses a reader irrespective of the type of tag or the reader.  Thus a breach into information is possible which may further lead to malevolent uses of databases or deletion of data.

How Retailers are Using RFID Today

Wal-Mart, its supplier Pacific cycle

Wal-Mart was a major force behind revolutionizing RFID in not only retail but also many other sectors. In an open letter, Wal-Mart called for the use of RFID from its 100 odd suppliers on pallets and crates. In just two years, Wal-Mart had around 300 suppliers using the RFID technology.

Pacific cycle, one of the suppliers of Wal-Mart, was quick to respond. Pacific cycle was also a fast growing consumer product brand. Therefore the company decided to fully implement RFID.

Though Pacific cycle could not get the required accuracy and database management after implementing for the first warehouse, this substantially improved after RFID was implemented for the second time. The company used a database managing company called SAP which helped it increase the accuracy from a mere 60% to 95%.

Thus by the decision of implementing RFID not only did Wal-Mart benefit, the suppliers of Wal-Mart like Pacific Cycle company benefitted well too. 

Billabong Sportswear in Barueri, Brazil

Billabong sportswear’s retail outlet in Brazil tested a new RFID enabled system in August 2011. The visitors to the store increased to a whopping 300 people who were attracted majorly to the RFID tags on the apparels. Billabong used a system which was connected to 5000 merchandise of different size. This stock is both on the retail floor as well as the backroom. Moreover the RFID system has software storing all the information identified by the reader. This has reduced the inventory count time from a typical 4 hours to merely an hour. Also, the store uses a Reader in the changing room which identifies the tag and provides the user with a variety of choices on a connected touchscreen.

These facilities have readily attracted the consumers and increased the sales of Billabong. Most Importantly, RFID reader at the exit checks the customers leaving for any tags and in turn validates with the inventory. This helps in making the store secure.

Summing it all up..

Major retailers-from the likes of Wal-Mart, 3M to European giants Metro and Future stores-have been using RFID for product management for the past 8 years. A variety of retailers use RFID depending on the various benefits RFID provides them . Some use it for security purposes whereas others use its efficiency in tracking and maintaining stocks and inventories.

There is no doubt about the importance of RFID in the retail sector. They provide a way out of losing  $50 billion in backroom theft for retailers worldwide. It increases the inventory accuracy by around 16% according to an analysis from Wal-Mart. The efficiency of supply chain also increases by around an impressive 60%. Therefore RFID is a technology that promises a sound and efficient future for Retail sector.