Such is the concept behind omnichannel sales. If the person can order the product online and have it shipped to the local store, that is a win for everyone. If the customer orders the product, gets a notice that it has been shipped but the store misplaces it, that is a huge loss.
RFID is just one of the many tools that benefit retailers, consumers and brand owners alike: the ability to have clear, real-time insight into inventory is a plus for all three of the major stakeholders, as are the insights into what sells for the brand owners and retailers and what the product offers for the consumer.
It is a growing market as well. In its report, “Radio Frequency Identification Market: Revenue to Grow at a CAGR of 14.5% During 2018–2028, Driven by Integrating RFID Technology with IoT and Big Data Platforms for Real-time Data Access,” Future Market Insights valued the global RFID market at $12.9 billion as of 2017, and estimates a CAGR of 14.5% now through 2018. In its report, “RFID Forecasts, Players and Opportunities 2018-2028,” IDTechEx sees the market reaching $11.2 billion in 2018. IDTechEx estimated that eight billion RFID labels will be used by the apparel industry alone in 2018.
From the early days of RFID being used to sort blue jeans to sophisticated systems allowing consumers to connect with the brand, RFID has come a long way. RFID is appearing throughout the retail world. For example, Mammut Sports Group AG recently announced that it is embedding Smartrac Circus Flex NFC tags into some of its products. This will allow consumers to receive digital content through Mammut Connect, Mammut’s smartphone app.
“Customers are digital, mobile and social. They communicate with brands, actively contribute and give feedback with much more concrete demands than just a few years ago. This is why Mammut is building an ecosystem,” said Oliver Pabst, CEO Mammut Sports Group AG.
Leading manufacturers report they are seeing more and more examples.
“RFID has been beating its goals handily over the last couple of years,” Keith LeFebvre, VP product & solution development and management, Zebra Technologies, said. “We expected RFID to have reasonably good growth, but I’d say that since 2016, it has really taken off, especially in retail.”
Karin Fabri, SVP, head of corporate communications & marketing for Smartrac N.V., noted that RFID adoption and implementation is progressing very fast.
“RFID helps brands and retailers become more efficient as it provides many new opportunities, insights and additional services, as well as customized, defined and instant information,” Fabri added. “RFID will continue to grow and play a major role in the market.”
Carl Rysdon, VP of RFID solutions for Checkpoint Systems said that RFID is more active in retail that it has ever been before.
“In the past few years we would only see a couple major companies moving forward with any significance and today we are seeing a significant increase over that,” Rysdon continued. “We’re seeing the majority of the high performing retailers in some form of deployment right now. “
“The RFID market has taken off, and RAIN is the fastest growing segment within the RFID market,” said Gaylene Meyer, VP, global marketing & communications for Impinj, who noted that Impinj shipped its 25 billionth tag chip and two millionth RAIN RFID connectivity device. “RAIN RFID adoption has seen consistent growth for the past 10 years and we’re approaching an inflection point, particularly as the retail industry transitions to omnichannel sales. This is driving increased adoption of both RAIN RFID tags and readers.”
“We see RFID continuing to evolve in terms of gains it is providing to retailers, as omnichannel becomes not just a nice to have, but now a must-have,” said Francisco Melo, VP/GM global RFID for Avery Dennison.
“RFID has long been seen as a technology that can optimize the supply chain,” added Melo. “With the rise in omnichannel in recent years, the benefits of RFID are now extending to enhancing the consumer experience by meeting consumer demand for purchasing across multiple channels. As the growth in e-commerce and in online pureplay overtakes many bricks and mortar retailers, RFID becomes a fundamental technology, and that single view of inventory and optimization of that inventory across all channels not only allows you to increase availability of inventory across all channels, which drives sales up, but also to mix and match things that have not been sold in your network, thus reducing markdowns and improving your bottom line.”
Improving Customer Experience
Customers have choices to make, beginning with selecting how they purchase items. If the customer can’t find the item they are looking for, they will be irritated.
“You start with the consumer,” Rysdon noted. “The consumer is going to buy what they want, where they want and how they want because of the increased inventory accuracy.
“The main benefits are that consumers are being empowered with more choices to buy what they want when they want, and how they want,” he added. “Faster fashion increases turnover and drives more sales at higher margins for both brand owners and retailers.”
“Product availability is very important,” said Melo. “Consumers first and foremost find what they want when they want it. If I am trying to find something and I can’t find it, that makes me unhappy. We believe that RFID will play a very important backbone role in supply chain optimization. We believe in this vision, wherein the relative not so distant future, each item will have its own unique digital identity.”
“For a customer, what they get is a better experience at the store,” Meyer noted. “When a customer has an expectation that they are going to get something from the store, they can go into the store and know that they are actually going to get it.”
“There really isn’t any other technology that can enable the inventory accuracy for retailers that RFID can,” said Michael Fein, senior product manager, RFID, for Zebra Technologies. “The scalability and the cost of the tags delivers that tremendous value.
“With the competition from e-commerce retailers, the burden is on retailers to deploy new experiences and to improve the customer experience in the store,” Fein observed.
“Inventory accuracy is the platform that enables those improved experiences. You can execute a strategy that the customer can buy online and pick up from the store and do that with confidence.”
“Consumers, for example, can get seamless and customized, valued content and will benefit from NFC tags that are embedded in the item,” Fabri noted. “Counterfeiting is on people’s minds, and secure product authentication provided by NFC is a must-have for brands and retailers today.”
Brand Owners and RFID
Brand owners also benefit from RFID.
“We see a huge demand from brand owners as well as on the consumer side. RFID-based solutions are getting more momentum in the market for NFC-enabled products in the sense that they provide real consumer benefit,” Fabri observed.
“Brand owners today want to know how their product is being merchandised and managed within the store,” Melo observed. “They sell to the department store, which puts items on display. But RFID shows if it is on display or still in the back room. If it is in the back and a consumer who is looking for it can’t find it, then they can’t buy it.”
Meyer noted that brand owners get a lot from RAIN RFID. “Brand owners get authentication that the product is truly theirs, which eliminates any concerns about counterfeit goods in the supply chain,” Meyer added. “Brand owners can also track their goods from the source of manufacturing until they reach the stores, offering an unprecedented level of information about their supply chain. Also, by analyzing which products are – for example – left in the dressing room, brand owners can identify particular styles, colors, cuts or materials that catch customers’ attention initially but don’t convert into sales, and they can adjust designs accordingly.”
Retailers and RFID
Of course, retailers bring together the brand owners and consumers, and RFID offers major benefits.
“Adoption has really taken hold in the apparel sector due to the need for high-level SKU accuracy,” Melo said. “Auburn University has shown that SKU level accuracy in a store without RFID is around 65%; with RFID that increases to 99%. We are now seeing greater demand for RFID across adjacent segments such as beauty and food.”
“Retailers consume billions of RAIN RFID tags each year to obtain real-time information about the products they manufacture, transport and sell,” Meyer said. “With RAIN RFID, they are able to improve inventory visibility, reduce out-of-stocks, enable omnichannel fulfillment, enhance shopping experiences, and prevent loss.
“Most retailers typically start deploying RAIN by tagging apparel,” added Meyer. “We see opportunities to expand their tagging to housewares, appliances, cosmetics, and eventually all items in a store. These same retailers typically choose inventory visibility as their first use case. We see opportunities to extend their use cases for already-tagged items to omnichannel fulfillment, loss prevention, enhanced retail analytics and more, all of which will improve the customer experience and satisfaction.”
“Retailers need to respond to the idea that they need to be able to compete with online companies,” LeFebvre concluded. “By having the ability to know that you have inventory where you want it allows them to better fulfill their customer’s needs. Customers walk into a store expecting to buy something, and if it isn’t there, the customer walks always disappointed and the retailer may have lost the customer forever. You also can monitor the levels of what the products are being depleted at, and you can do automatic replenishment for items that are selling more briskly.”
The Near Future for RFID
Industry leaders agree that RFID will play an even larger role in the retail world. For example, Meyer noted that the International Air Transport Association (IATA) established a mandate in June 2018 requiring member airlines to implement RFID baggage tracking. IATA will develop implementation standards over the next year, with the goal of rolling out the technology globally by 2020. The retail market will likely grow as well.
“It’s likely that every apparel and footwear retailer will be using RFID,” Rysdon said. “Inventory accuracy from source to shopper will be at unprecedented levels.”
“Tagging all products will enable retailers to gain benefits of visibility across all inventory,” Melo said. “As adoption grows within the food space, it will also have a huge impact on reducing food waste by increasing visibility of products end of life. Consumers are also demanding more transparency surrounding the products they consume. Linking RFID to consumer-facing technologies such as QR codes or NFC through our Janela Smart Products Platform provides the opportunity for retailers and brands to make consumers aware of the production process and raw materials used as well as information on how to care for and recycle a product at the end of its life.”
“What’s clear, based on the tag growth trajectory, is that the technology is delivering desired results,” Meyer observed. “Retailers are expanding deployments from one category of items to multiple, and from one use case to multiple. Once a RAIN RFID tag is applied to an item, the opportunity to derive value increases exponentially. Most retail deployments begin with a focus on inventory accuracy but expansion options include areas that directly impact customer experience, including on-shelf availability, smart fitting rooms and frictionless checkout.”
About the author: Dave Savastano is Editor of Printed Electronics Now magazine, a sister publication to L&NW.