RFID GOES MAINSTREAM

19 March 2019

By Roland BROUTIN, Director Innovation Division, AURES Group

Stores that have implemented RFID projects seem to be one step ahead of their competitors in meeting today’s business challenges. Thanks to the highly detailed data provided by this technology and the real-time traceability of each product, they are in an ideal position to deploy innovative solutions at the POS before the others.

In any case, this is what a study conducted by Accenture Strategy with more than 100 brand managers on the adoption of RFID tells us.

To maintain and develop contact with multiple, complex, demanding customers, retailers are redoubling their efforts, sometimes investing massively in omni-channel strategies: RFID is paving the way for a new wave of major innovations and playing a decisive role in transforming points of sale and their environment.

RFID (Radio Frequency Identification) technology has experienced unprecedented growth in terms of use, capacity development and overall impact on the retail sector. Of the 110 brand managers surveyed as part of Kurt Salmon’s 2018 study “RFID and Retail”, 69% believe they have achieved a significant level of RFID adoption. This growth is largely driven by the requirements of multi-channel operations and the need to continuously improve the customer experience.

While the unit price of RFID may initially have been a drag, the decline in technological costs and the proliferation of applications continue to increase its profitability.

Sixty-nine percent of retailers worldwide have already adopted RFID in a significant way.

Towards a new standard in Retail

RFID adoption is most advanced in North America. 92% of retailers are involved in a global deployment program. This figure is up by more than 25% compared to 2016, demonstrating that RFID can now be considered as a “near standard” technology across the Atlantic.

In Asia, driven by the need to meet customers who want to shop anywhere and anytime, 70% of the brands surveyed are turning to RFID to improve their inventory knowledge.

While RFID has been a real hit in the rest of the world, it is struggling to take off in Europe, where only 30% of the brands surveyed have launched its deployment.

Nevertheless, a number of European companies are using RFID and their number is expected to increase as the omnichannel challenges increase its need.

The different factors of RFID adoption

Retailers who adopt RFID do so mainly for five main reasons:

It allows optimized knowledge and management of stocks and inventories (stock shortages are avoided, product exchanges between stores are facilitated, inventories during opening hours become possible, etc.).
It allows the acceleration and automation of checkouts and considerably facilitates the queuing process.
It allows much faster and more reliable in-store order preparation, in a sales area that can then be reduced as not all products have to be physically presented.
It allows the installation of anti-theft and anti-fraud protection (against counterfeits for example)
It allows you to search and find a specific product very quickly, even if it has been moved or misplaced on the shelves.

Outlets that have been using RFID for more than a year are all tempted to explore more advanced applications, such as the use of blockchain and smart technologies in stores.

The main challenges concern the provision of better customer service (reduction of waiting times in stores, optimisation of the management of certain products on the shelf, improvement of personalised marketing, better inventory management, which we have mentioned above (e.g. combating stockouts), and ultimately an increase in operating margins.

The brands that were in the test phase at the time of the aforementioned study recorded a ROI of 6.8% on average, while that of the stores that had fully deployed it was more than 9%.

These results therefore reveal a strong correlation between adoption levels and return on investment. The arguments in favour of adopting RFID are therefore strong and its financial benefits tend to increase over time. Indeed, savings increase as a brand moves from the experimentation phase to full adoption of the technology.