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RFID Propels the Retail Sector Forward

Analyst Insight: With the consumer's hands firmly placed on the steering wheel, omnichannel retailing is driving the retail industry forward with record-breaking speed. Item-level RFID is fueling the journey by providing retailers with real-time inventory visibility, rich data insights, and a means for better trading partner collaboration - allowing for more efficient supply chain operations and ultimately, an enhanced customer experience. - Melanie Nuce, Vice President of Apparel and General Merchandise, GS1 US

RFID Propels the Retail Sector Forward

In 2015, Electronic Product Code (EPC)-enabled Radio Frequency Identification (RFID) technology reached a crucial tipping point and became a near prerequisite for any retailer looking to put their omnichannel strategies into action. According to GS1 US research, more than half of U.S. retailers (57 percent) are currently implementing RFID - numbers that coordinate with recent announcements about RFID expansion from major retailers, including Target and Levi's this year, confirming increased use of RFID to improve inventory visibility.

RFID helps retailers understand two inventory essentials for omnichannel success -"what do I have?" and "where is it located?" According to Auburn University RFID Lab research, inventory inaccuracies within SKUs improved from an average of 63 percent to between 95 to 99 percent. This means that without the visibility RFID brings, up to one third of a retailer’s inventory would be invisible and unsellable. Inventory count rates increase significantly over the normal speed - from 250 items per hour to more than 20,000 - and out-of-stocks are cut in half. It is for these reasons some retailers say that item-level RFID is like an omnichannel lifeline.

Aside from the primary use case of inventory visibility for omnichannel, RFID has other applications that industry stakeholders should consider in 2016:

• Product Authentication - RFID allows for item-level serialization, which helps fight counterfeit goods. Brand owners assign a unique serial number to each item, which is then stored in a database. On the retailer’s end, employees can scan the tag and immediately find out whether the numbers are among those assigned by the original manufacturer. Serialization also helps retailers spot out-of-sequence numbers that may signal counterfeit products.

• IoT Automation - As we inch closer to an Internet of Things (IoT) reality, more manual processes are going to be automated to provide a unique and personalized store experience. RFID is one of several technologies that will enable fast replenishment, zone productivity analysis and instantaneous data sharing between “things.”

• Distribution Center Operations - RFID is playing an increasingly larger role at distribution centers - tracking pallets, cases or individual items. The technology has the potential to enhance out-of-stock monitoring and enable smoother and more detailed inbound and outbound inventory reads.

• Data Sharing - With RFID, it is easy to store information such as country of origin, manufacturing facility, and cost in a database. Sharing this information between supply chain partners could lead to enormous growth opportunities, not to mention other benefits like an expedited returns process or insight into defective items stemming from a particular plant, for example. The next step in 2016 is for retailers to develop a strategy for storing RFID data so it can be analyzed and leveraged for a better customer experience.

The Outlook

In 2016, RFID will continue to propel omnichannel forward, and we’ll continue to see successful applications that make shopping a more enjoyable experience. Beyond inventory accuracy, RFID will become the retailer’s and manufacturer’s ally, as its data capture abilities will prove to be a strategic asset, creating many new business opportunities.

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