How Retailers Can Best Leverage RFID Technology
In the retail world, radio-frequency identification (RFID) technology holds many promises. It can increase productivity, boost sales, bolster job satisfaction and improve customer service. With RFID, retailers are better able to ensure adequate stock levels, and active RFID tags can anticipate a shopper’s needs based on their profile in order to target them with offers and promotions that are likely to suit their interests or needs.
In this way — along with other technologies such as wireless, wearables, analytics, interactive digital displays and mobile payments — RFID can enhance the shopping experience while also making in-store operations more efficient. One recent report estimates that the market for RFID applications in retail will grow at an average compound rate of 40 percent annually until 2019.
But RFID technology is about more than just the tags. There’s a whole network behind it that needs to be put in place and managed. According to Bloor Research, behind the tags themselves, there are four different levels of technology to be managed:
- The physical layer, where the tags and sensors reside.
- The device layer, which is concerned with the devices that record events from RFID tags.
- The interface and edge application layer, which is middleware that turns information gathered into actionable insight.
- The business application layer, with business logic applications like enterprise resource planning and HR systems.
What Makes RFID Implementation Successful?
Recent research from LPM Insider looks at the reasons why retailers are investing in this technology and why implementations are successful or not. While stock-loss prevention is a key driver for RFID, the top priority among retailers is to improve inventory accuracy. That shows the technology isn’t all about the front-end, customer-facing experience but also organizational efficiency and the whole chain of events that occur to get goods to the shops.
LPM Insider suggests the most effective implementations start on a limited scale, often focusing on products that it describes as having a “high mix complexity,” such as items for which many different sizes, colors or styles must be displayed, such as cosmetics, fragrances or shoes. Many such items have relatively high price points and margins, so choosing them for a pilot will help ensure all the network components behind the tags themselves are working efficiently, from the physical to the business application layer.
Putting all the network and infrastructure components in place is a daunting task, and this is where projects need the most support. The top reasons for RFID projects failing or being canceled are lack of a well-defined use case, lack of executive support and being superseded by other business priorities, LPM Insider reported. Any large-scale implementation can be doomed to failure if return on investment isn’t proven quickly enough and the benefits of the venture aren’t made clear. It’s hard to overstate the importance of choosing a use case that proves the benefits available are sufficient to justify the investment.
To manage the infrastructure and network requirements of RFID technology, there are software applications available that integrate directly with retailers’ IT systems, making the technology user-friendly at the retail-store level. This will help to iron out some of the bumps in making the back-end network infrastructure easier to operate.
Service providers and services integrators who have experience implementing complex RFID systems and integrating them with current infrastructure will understand the pitfalls of such a large undertaking and can guide any retailer around them. They’ll be able to see the system as a whole, looking at integration, engineering and customization needs.
RFID technology is a major technical innovation that holds great promise. It not only provides efficiency for organizations in their back-end operations — it can also improve the shopping experience for customers. Used effectively, RFID technology can be a win-win for retailers in many fields.