As new systems and digital capability continue to evolve the way retailers run their businesses, Essential Retail is gauging the views of the sector's main figureheads, via a series of exclusive interviews. This week, it's the turn of SML Group's chief technology officer and SVP for RFID solutions, Dean Frew.

The head of technology at the UK's largest grocer, Tesco, addressed attendees at last month's National Retail Federation (NRF) Big Show on the company's roll-out of RFID technology for its F&F clothing arm.

Matt Newby said the clothing brand began its trial of the technology at the start of 2015 by introducing it to three stores, before deploying it in 200 stores by November. RFID is now across all 300 stores, and has apparently helped improve out-of-stocks by up to 75% and 99% in some of its shops.

Using RFID to gain a clearer understanding of where products are from the moment they enter a store all the way through to replenishment has helped the retailer's stock visibility, which Newby says has improved its the shopping experience, reduced the time it takes for inventory counts, and freed up staff to be on the shop floor serving customers.

As Essential eCommerce reported in January, the next step for Tesco F&F is to harness all of the data that RFID brings into the business in order to be predictive and react quickly to demand or circumstance. 

Dean Frew, chief technology officer and SVP for RFID solutions at SML Group, which produces the majority of the tags for Tesco F&F at the same time as producing the inventory management software in the retailer's stores, is predicting big things for the project.

"When it comes out, everything that's going on there, it will be viewed as the number one RFID deployment in the world," he told Essential Retail.

"It is phenomenal."

Positive signs for Tesco, it would seem, but also positive signs for the wider business case for RFID in retail. Despite its many promises of inventory improvement over the years, we are arguably now entering the third wave of RFID in retail – but this time there is real hope it can have the transformational impact it has always promised.

Back in the early 2000s the world's largest retailer, Walmart, made grand plans to work with its suppliers and apply RFID to its pallets and goods throughout its global distribution centres, in an attempt to track, manage and gain the single view of stock, which is often touted as the 'Holy Grail' in retail speak. Various complications caused by lack of supplier compliance and the general expensive nature of the implementation contributed to the project being halted before it had really made ground.

Two years ago, US industry giants such as JC Penney, Macy's and Walmart again, in the words of Frew, "started playing around with it", leading to a number of retailers putting plans into place which are now coming to fruition. Industry events such as RBTE now have whole areas dedicated to RFID, while some retailers even employ staff with RFID-specific job titles, highlighting how much it is now embedded into the sector's psyche.

"You look at our engagements and focus and it is not uncommon for us to get a call a month rather than a call a quarter from a retailer that's already made a decision to invest in RFID," he added, before explaining that there has been a shift away from RFID 2.0 which covered electronic article surveillance, the supply chain and eCommerce systems, towards a more encompassing, business infrastructure approach to the technology.

Frew explained: "To see the evolution from Walmart days and consumer packaged goods firms to where we are at now is quite exciting.

"A lot of things are converging with 3.0 – item level, omnichannel, customer experience – which are essential to RFID. How are you going to fulfil orders out of your store if you don't know what's happening with inventory? For modern cross-channel retailing, you need good inventory."

The SML CTO argues that there is a correlation between the retailers that are successfully getting results from RFID deployment and those that have embedded the technology deeply into their business processes and are using it for operations such as stock counting, replenishment, receiving goods, stock enquiries, moving goods and delivery accuracy.

Retailers to have spoken publically about the positive results they are seeing from the use of RFID, which arguably can be listed on one hand and cover Zara owner Inditex Group, American Apparel, Marks & Spencer, Decathlon and Tesco, are apparently businesses that have been comprehensive in their deployment.

Dean Frew argues American Apparel would have gone out of business if it hadn't implemented RFID

"Pretty much all those companies have RFID-ed all their products, integrated it with their enterprise systems and they've got decent process coverage," noted Frew.

"For all three of those dimensions it's check, check, check."

He advises retailers to focus on the return on investment potential rather than the initial cost of the tags and he argues that only tagging certain products – as opposed to the whole range – can be "a career limiting move".

"Be realistic about what your inventory accuracy is today and what it's costing you," Frew added.

"What's the inaccuracy costing you? Retailers that take that first step tend to be pretty objective about what benefits they can get out of RFID."

These advisory steps seem to have been observed by Tesco F&F, and the industry will wait and see if the process of tagging clothing is extended to its food business later down the line. Newby is CTO of the wider retail group, of course, so will inevitably be weighing up its potential impact outside of non-food SKUs.

Last spring saw US retailer Target announce it was embarking on an RFID journey, which would involve item-level tagging on womenwear, baby & children's apparel, home decor and other merchandise categories. Keri Jones, executive vice president for Target's global supply chain & operations, described the roll-out which started in a small number of stores last year and will be expanded to all stores in 2016, as "one of the largest RFID projects in retail".

Earlier this week, Charles Nicholls, SVP for product strategy, marketing solutions at SAP hybris, predicted at a industry event that RFID is "going mainstream" based on what he has experienced in the marketplace. There is certainly momentum building around this technology.

Said Frew: "A growing number of retailers are saying they have to reinvent themselves in terms of how they manage inventory, and there's only one answer: and that's RFID."

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SML Group