RFID in Retail: Why Retailers Choose RFID & How to Benefit From It

RFID in Retail: Why Retailers Choose RFID & How to Benefit From It

The use of RFID in retail can be traced back to the early-2000s when American retail Walmart spent near to $500 million on RIFD protocols. This alerted consumer-focused businesses to capitalise on retail asset tracking solutions, in particular RFID technology.

An RFID asset tracking system works by scanning an RFID tag with a reader and collecting that data in a tracking database. Using RFID in retail presents a whole host of benefits and opportunities for brick-and-mortar stores. Most importantly, it also helps to enhance the shopping experience for customers.

From improving stock control and optimising inventory purchases to boosting sales and reducing holding costs, it’s easy to see how an RFID asset tracking system can positively impact a retail workplace.

Using RFID to Track Retail Assets

Using Radio-frequency identification (RFID) for tracking physical ‘things’ is not a new concept. In fact, the first working RFID tracking system can be traced back to the Second World War when it was used to identify aircraft.

Over the next 80 years, RFID tools evolved; a patent for the first RFID tag was drawn up in 1973 and the first Ultra-High Frequency (UHF) reader was invented by IBM in the 1990s.

However, it’s only in the last couple of decades that RFID has had a noticeable presence in the retail industry.

UK retailers Marks and Spencer were among the early adopters of RFID tools back in 2001 and still rely on the same technology today. They recently took part in a research project which highlighted a boost in sales of up to 5.5% when using RFID tracking solutions. The results also showed a reduction in stock holding, lost and stolen inventory, and staff costs.

RFID tracking works by using radio waves to read and transfer data from small chips (RFID tags) to a reader equipped with an antenna. The RFID reader then transmits that data to an asset tracking system where it is stored, evaluated, and actioned. Keep in mind that a reader can be anything from an employee mobile device to a system-specific hand-held scanner.

By tagging products and stock with RFID tags, staff can automatically track inventory and stock levels while minimising the risk of loss and theft. In a retail environment, RFID asset tracking can be used for individual products on shelves as well as moveable assets. For instance, a supermarket may want to equip their trolleys and baskets with long-range RFID tags to avoid losing them and reduce the cost of finding replacements.

When it comes to choosing the right tools for implementing an RFID tracking system, there are a few factors that you may want to consider. Such as:

  • At what distance do you need to scan for items?
  • Which RFID tags do you need (Active, Passive, or Semi-Passive)?
  • Do you require weatherproof/durable tags?
  • What frequency do you need your tags to operate at (Low, High, Ultra-High)?

The RFID system you choose will largely depend on the type of products you sell. It will also depend on what problems you’re hoping to solve. For instance, are you looking for an inventory management solution? Do you require greater visibility of the supply chain process? Or are you focused on loss prevention and theft?

Improving Stock Control and Minimising Out-of-Stock Situations

Asset tracking tools can be used for a variety of factors, one that is particularly useful for retailers is to gain greater visibility of the supply chain from manufacturing to distribution. This lets managers understand whether their products are stored on a pallet, in a container, or are on their way to the store. Providing a greater knowledge of where stock is located and when it is available.

A key aspect of using RFID in retail is being able to scan hundreds of assets at one time. As opposed to a more manual approach such as Barcoding, where items need to be scanned one at a time.

This allows for quick and easy stock checks that would otherwise take days to complete; ensuring shelves are replenished when needed. After all, having consistently stocked shelves helps to meet customer expectations and improves the overall shopping experience.

Another advantage of opting for RFID technology is to improve the accuracy level of inventory. In a case study that featured 10 industry leaders, the inventory accuracy of retailers rose from 65-75% to 93-99% with the introduction of RFID asset tracking systems.

Retail Asset Tracking before and after RFID adoption

Clothes retailer, River Island, also took their stock accuracy from 70% to 98% by implementing an effective RFID system. In turn, they have seen a significant boost in sales and are now able to ensure that the most popular product lines are always stocked.

Stock control is critical for today’s retail stores. So much so, that 80% of consumers say they’re less likely to visit a store if the retailer’s website doesn’t provide real-time stock availability. But, that’s where an RFID asset tracking system thrives. A good system will ensure that a store’s stock quantities are updated instantly, from the arrival of stock to the selling of items. Meaning that customers in-store and online aren’t left disappointed.

Enhancing the Shopping Experience with RFID in Retail

One of the most exciting developments in the use of RFID is its potential for changing the way customers browse and shop for products in brick-and-mortar stores.

Imagine going into a store, adding items to a shopping trolley and walking straight out the door; completely bypassing the point-of-sale (POS) process. Well, this is now a possibility. In fact, it’s already happening, with Amazon Go leading the charge. The concept behind this is to reduce checkout queues and shorten the POS stage.

Some retailers, like Tesco, are now using ‘scan as you shop’ technologies to try to reduce checkout friction. Making the experience more seamless for customers. While supermarkets use barcode scanning technology for this service, which requires the shopper to scan items one by one, RFID technology can become a game-changer in the way ‘scan and shop’ works.

Another innovative use of RFID in retail is interactive fitting room mirrors. These smart mirrors can recognise products through RFID tags and automatically sync with a tracking system to provide real-time product data such as stock and size availability.

Interactive shopping experiences like this provide customers with a more memorable and personal connection to a product. As well as helping retailers to differentiate their brand and products from competitors in the same space.

Why Retailers Choose RFID Over Barcodes and NFC

The introduction of RFID in retail has the proven potential to positively impact all brick-and-mortar stores. Not only does the evidence prove an increase in stock control and a reduction in costs, but it is also opening the door for other innovative uses. Which will take the overall shopping experience to a new level.

In fact, one retail expert believes that Marks & Spencer could potentially create a system where customers can pick up RFID tagged products, pay via their phone, and leave the store. An RFID tracking system would effectively be able to ‘see’ what the shopper has in their basket. Without the need for scanning it.

Although there are other asset tracking solutions on the market, such as Barcoding, Bluetooth, and NFC, RFID is widely considered the chosen technology to further develop a new era of retail. One which enhances the checkout experience and improves overall retail operations.

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