Canadian Retailer - Store 2017 - 28

LOSS PREVENTION SOLUTIONS
Connecting the dots

When it comes to this technology, both Smith and Sarma definitely know their stuff; Sarma is the co-founder of
MIT's Auto-ID lab (where the tech was first developed),
and was pivotal in developing the Electronic Product
Code around which the system revolves. And GS1 has
been involved in the development of RFID for commercial use-alongside MIT and independently-since
2003. RFID technology it"IF YOU CAN START
COMMUNICATING THROUGH self goes back even further;
RADIO FREQUENCY, AND in fact, it's the descendent
IMAGINE THAT EVERY ITEM HAS of the IFF transponder, deA TINY LITTLE TRANSMITTER veloped by Leon Theremin
EMBEDDED IN IT-IT CAN TELL (yes, the guy who invented
YOU WHO IT IS. IT CAN TELL the instrument) as part of a
YOU WHERE IT CAME FROM, highly successful attempt
WHAT IT'S MADE OF. THERE'S to spy on American EmbasLOTS OF INFORMATION." sies during the Cold War.
- ART SMITH
The technology as it exists
GS1
today was developed at
MIT beginning in 1999, and while Canadian retailers
have been relatively slow to adopt it, Auto-ID has seen
extensive use throughout the US and Europe-where industry leaders have embraced it with open arms.
"This has been used by retailers where it's very difficult to predict customer demand," explains David
Simchi-Levi, a supply-chain researcher at MIT. "RFID
implementation provides them with multiple capabilities, including visibility into customer demand, visibility into where inventory is, and security in terms of
theft. Companies like Zara have already implemented
RFID, and are using it effectively. Matching the customer value proposition-fashion products at a reasonable price-to an operational focus on speed. And this
technology allows them to accelerate that speed."
Indeed, Zara is one of the most successful examples
of the transition from traditional barcodes to AutoID technology; as of the writing of this article, parent
company Inditek has already completed RFID implementation in all Zara locations, with plans to deploy it
in the remainder of the company's stores by the summer of 2020. And the benefits are already obvious; according to a recent study by Auburn University, AutoID implementation stands to raise inventory accuracy
from 65 per cent to a whopping 95 per cent.
"This technology allows garments to be individually
identified, from logistic platforms through to their sale,"
explained an Inditex spokesman. "It represents a huge
step up in technology that allows the entire workflow to
be redesigned in stores where it is implemented, leading in turn to an improved level of customer service."
Inditek CEO and Chairman Pablo Isla went even
further, telling Canadian Retailer that Auto-ID technology was "one of the most significant changes in
how the Group's stores operate".

28 |

CANADIAN RETAILER

| THE LOSS PREVENTION ISSUE

Jet set radio future

And it's not only Zara that's taken an
interest. Wal-Mart started using the
technology back in 2003 (although that
project was ultimately put on hiatus),
and Macy's claims that 100 per cent
of their merchandise will be Auto-ID
tagged by the end of 2018. As of 2013,
the RFID market was worth more than
$8 billion. By 2026, it's projected to be
worth more than $18 billion. And, as
time goes on, Sarma and Smith note, the
technology will inevitably hit critical
mass at which point retailers will have
to adopt it or risk being left behind.
"Lost inventory hurts everyone," says
Sarma. Even if they haven't adopted it
for retail use, they'll have to for online
business. Because in the face of online
competition, brick-andmortar retailers need to "RFID IMPLEMENTAprovide accurate inven- TION PROVIDES THEM
[RETAILERS] WITH
tory information."
"It's going to come," MULTIPLE CAPABILSmith concludes. "It's go- ITIES, INCLUDING
ing to be ubiquitous-not VISIBILITY INTO
just in retail. Prices are CUSTOMER DEMAND,
VISIBILITY INTO
coming down and perWHERE INVENTORY
formance is going up,
IS, AND SECURITY IN
every day. When we say
TERMS OF THEFT."
Canadian retailers are
- DAVID SIMCHI-LEVI
behind, they're not the
MIT
only ones behind. I think
there are many countries where-as you
would expect-a lot of people are sitting
back and waiting and saying 'When do
we invest? When does it make sense?'
Canada's sitting, and we're watching
what's happening."
And as that industry transforms, as
businesses become increasingly omnichannel, as supply chains require increasing levels of efficiency, the retailers who thrive will be the ones who can
stay upright through the shifting tides
to come, and embrace the opportunity
to ride the radio wave.
"We're at a very exciting point, to
watch the industry transform," Smith
notes. "There are a lot of technologies
that have changed the way the world
works: the internal combustion engine,
the microchip, the internet. And giving
computers the ability to talk to things-
it's going to change everything."

Table of Contents for the Digital Edition of Canadian Retailer - Store 2017