Global insight: RFID deployment in retail set to accelerate

This story was originally published in Planet Retail's IT & Supply Chain newsletter on Thursday 23 January.

Disposable RFID tags on item-level for clothing are nothing new. In recent years, many retailers around the world have been extensively piloting this technology. However, the trickle has now turned into a torrent with several retail heavyweights deciding it is finally time for a roll-out. Last week, we had not only Kohl's and Asda announcing their plans for RFID, but also more details about Macy's large-scale roll-out have surfaced.

Macy's has piloted RFID in the shoe department of its Herald Square flagship store in New York.

At last week's National Retail Federation (NRF) Big Show in New York, Planet Retail learned that technology providers, such as Tyco, Checkpoint Systems and Avery Dennison, have developed packaged applications making it easier for apparel retailers to implement RFID technology throughout their organisations in support of a scalable approach. Moreover, these platforms often provide real-time access to inventory data and analytics via dashboards – also accessible via mobile systems – that help store managers to optimise their stock levels and speed up the replenishment process. In this editorial, we will take a closer look at exactly what is now driving retailers’ extensive investments.

First of all, why fashion? It has long been accepted wisdom that one of the most sensible deployments of disposable RFID tags is for clothing items and not food products. Apart from the obvious benefit of every RFID roll-out - visibility of each single item across an entire supply chain there are a number of further reasons making RFID especially suitable for clothing. First of all, margins on fashion items are higher, meaning the tags’ costs are less of an issue. Secondly, many fashion businesses are organised in a vertical manner, which means they exercise control over the entire supply chain and so can easily tag items from the start of the manufacturing process. Thirdly, quick and stress-free inventory monitoring is especially welcome when managing assortments comprised of many different colours and sizes. Manual work is significantly reduced and out-of-stocks can be dealt with far more effectively.

While most of the RFID projects to date have a clear focus on improving inventory management, the technology offers additional capabilities regarding theft control and the checkout process. Last December, French sport and leisure specialist Decathlon announced it was not only aiming for 100% tagging by 2017, but also hoped to make barcode scanning at the checkout redundant while also using RFID tags for theft protection. Such a strategy could allow Decathlon to reap even more rewards from RFID implementation beyond inventory efficiencies and avoiding out-of-stocks. The retailer will be able to improve proficiency of in-store product handling all the way from beginning (goods ship to store and are placed on the rails) to end (shoppers make purchases at the checkout). There is one downside to using RFID tags for theft protection, however. They do not offer the same level of security as dedicated Electronic Article Surveillance (EAS) devices. This fact might prompt some retailers to think about deploying hybrid RFID/EAS tags.

The RFID projects undertaken by Macy’s, Kohl’s, Asda and Decathlon will very likely have sent a clear message to their retail market peers. In the ensuing months and years, we will definitely see many more clothing specialists as well as non-food retailers announce investments into large-scale RFID deployments. With the advantages of the technology being so abundantly obvious, it is hard to imagine RFID not becoming something of a gold standard of future fashion retail.

Essential Retail will be running a five-part series on RFID, starting next week. The series will highlight the importance of the technology within retail and look ahead to the In-store Customer RFID Experience, which will appear at RBTE 2014 between 11-12 March.

In addition, Helen Slaven, managing director of Planet Retail, will be presenting a session on 'Global Trends & Forecasts 2014 – Drivers of Change in International Retail' as part of the RBTE 2014 conference programme.