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the "second-use cases" are becoming the powerful
story about RFID. Companies can deliver superior
customer service because both online and bricks-andmortar consumers can instantly find the products
they want in with 100 percent accuracy. Retailers are
starting to understand "there's a lot more value to
this than just controlling inventory," he says.
Dean Frew, chief technology officer and senior vice
president of RFID solutions for SML Group, says
RFID could offer apparel retailers strong insight into
how shoppers view products and journey through the
"A consumer took three shirts in the dressing room
and came out with two," he says. "What's wrong
with that style or color? Why are people taking it in,
trying it on and not buying it?"
Despite its benefits, few retailers are using RFID to
its full potential. One of the reasons is that it can be
difficult to fully quantify the return on investment.
Platt says retailers such as Macy's are interested
in information about ROI because it can be more
cost-effective for brands to tag products during the
manufacturing stage rather than incur the added time
and labor costs of adding tags at distribution centers.
As a pervasive technology that can run through
the supply chain and offer benefits from the
manufacturing floor to the sales floor, Platt says
more awareness could spark greater adoption.
"There's hope that as more retailers adopt it, there
will be more of a push on the vendors, particularly in
the apparel segment, to start labeling at the source,"
The price for an RFID tag has fallen from $1
in 2003 to approximately 10 cents today. Yet in
addition to tags and installation, retailers also need
to consider Internet of Things equipment, software
and how people will utilize it. They'll also need a
means to consider how they'll quantify their savings
in time and their improved customer experience.
Tyco has a Retail RFID ROI Estimator that factors
in things such as the number of items to be tagged,
number of stores, average unit retail and gross profits
for tagged items, store SKU accuracy, labor costs and
Brown says RFID ultimately aids retailers in
their management of working capital. He says the
payback from RFID implementation is "strong and
fast," and that the second-order use cases become
more powerful to build the organization and drive
exponential customer experience and business value.
RFID is being deployed in other retail segments
as well. "Clearly we're in the area of fashion and
apparel," Brown says, "but we're beginning to have
conversations, even in food and drug, around
some of the higher value, higher tracking areas of
meat and produce."
In a grocery case, other technologies can be
attached to the RFID tag to tell not only where
the product is and how long it has been sitting
on a shelf but also track temperature. Tracking
such products on a consistent and continual basis
could avoid a lot of waste and spoilage. This
model could also be applied to some high-value
components in the drug and cosmetic markets
where high profits and high value in consumers'
minds make inventory management even
As more retailers expand their omnichannel
capabilities, they'll place more value on inventory
visibility. Brown says most retailers typically
start losing visibility of 3 to 5 percent per month
from June through the end of the year and end up
with 65 to 75 percent visibility by the holidays;
RFID becomes a "powerful tool and competitive
advantage" when retailers use it to join the links
between online and bricks-and-mortar, he says.
Melo says that it will create a better connection
between consumers and products. "I think that
sort of connected product, that connection of
that unique identity, starts with the RFID for the
consumer. That's really where we are and what
we're going to be seeing in the years to come."
It's less a matter of if then when RFID will be
deployed on a mass scale. Demand for RFID tags
is steadily rising - a forecast from IDTechEx said
retailers will deploy more than 5 billion tags in 2017.
SML Group, one of the largest RFID technology
companies in the world, made more than 1
billion tags for the apparel industry last year.
Frew says the market for RFID applications in
retail is only at 6 percent penetration, equating
it to Geoffrey Moore's model of "crossing the
chasm" where there are multiple segments of
technology adopters, all with their own behavioral
It says the most difficult step is to make the
transition between the early adopters and the
pragmatists, the early majority. It ultimately takes
momentum to tip the scale. "What we're seeing
is that all those retailers like Decathlon, Macy's,
Marks & Spencer, American Apparel and Zara
are on one side of the chasm," Frew says. "On the
other side, we have a whole series of retailers [that]
are just very pragmatic."
Craig Guillot is based in New Orleans and writes about retail,
real estate, business and personal finance. Read more of his
work at www.craigguillot.com.
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