After years of bit-parts without the promised breakthrough role, Radio Frequency ID (RFID) technology seems to be moving into the retail limelight. Using either passive or active tags attached to each item of stock, RFID means retailers can achieve a real-time picture of their entire inventory through either fixed scanning points or hand-held devices. As the price of tags has dropped substantially in the last decade, so the technology has become far more viable.
Author: Steve Thomas, Chief Technology Officer, Omnico
It now has the potential to enable genuine omni-channel retail, once integrated into an overall solution capable of using its vastly superior stock visibility to fulfil customer requirements at each touch-point.
It was certainly very positive for the technology’s reputation when Macy’s, the American department store chain, announced that this year it will apply RFID to all of its stock. Others to increase its use include Marks & Spencer.
It is becoming apparent right across the retail sector that with effective integration, RFID will help cut costs, increase efficiency, and ultimately boost profits for a retailer.
Practical consumer benefits
In practical terms it enables a retailer to ramp up the effectiveness of click-and-collect fulfilment, especially when consumers want to pick up their online purchases in a store. If RFID visibility reveals that the item required is already in the location the customer has chosen as their pick-up point, the retailer does not have to waste time and budget finding, packing and transporting it from the central warehouse. Even if the item is not in stock, it becomes possible using RFID in conjunction with advanced omni-channel software, to find the item in the nearest store and have it sent over, reducing the overall drain on resources.
The technology makes it more likely that consumers will find what they want on the rack or shelf. In fashion retail, for example, staff can see when stock is lying around in a changing room or has yet to be moved on to the shop floor from the stock room.
A quick look at their tablet should be sufficient for staff to see where individual items of stock are, directing customers to the precise shelf and aisle where they can find what they want. RFID also increases the effectiveness of new customer-facing technologies such as augmented reality-enabled 'magic mirrors', kiosks or phone apps. Once customers have used these devices to decide which colour, size or style they want, they can be directed straight to where it is.
Anytime anywhere availability
In fact the entire stock becomes available for sale at any time, regardless of its location, which is a big step towards true omni-channel retail. This many-times magnification in stock-control means a retailer is infinitely less likely to tell a customer that what they want is not currently available or is out of stock.
Until recently retailers were discouraged by, not just the cost of RFID, but also real-world impracticality. It could exist that rather than taking stock with a hand-held reader, retailers could use one centrally-located RFID device in each store, achieving inventory-accuracy of as much as 95%.
The potential of NFC
The huge gains in efficiency from real time stock visibility are one advantage of RFID. But its companion technology NFC (Near-field communication) also has great potential as shoppers increasingly want to enjoy hospitality and leisure attractions as part of a day out at retail parks and malls.
NFC is already with us on a huge scale in the shape of contactless payment cards, with their use rapidly increasing across UK public transport and retail in the last couple of years. Contactless payments via card are however limited in the UK to a £30 maximum.
In malls and leisure parks, this restricts the cards’ utility, whereas NFC wristbands and fobs enable customers to pay for almost everything using one simple cashless device, with the major advantage that loyalty points and offers can be instantly tallied at the point-of-sale, regardless of where the customer is in the complex. Consumers are free to spend as much as they wish, but are also instantaneously aware of their points, rewards and access to personalised offers. From a retailer, leisure or hospitality operator’s point of view, this opens up huge opportunities for enhanced engagement with each consumer.
Cheap NFC tags can also be attached to almost any item, so that customers can download information to their phones, making a more informed purchase. DIY products can carry tags that explain how the product can be used in detail, while foodstuff tags can include extensive recipe suggestions.
These tags, can where desired, become the unique identifiers of products once they have left the store. For electrical goods this potentially makes registration with the manufacturer and any subsequent warranty validation much easier.
The consumer appetite for change
We know there is a general appetite among consumers for this kind of technology to make their shopping easier and more enjoyable. In research conducted by Omnico among 1,000 UK consumers, 61% said they expected to see new technologies in retail in the next three years, while more than a fifth (21%) said wearable, cashless payment technology such as an RFID or NFC wristbands would be part of that revolution.
RFID and NFC are obviously technologies whose time is fast approaching if not already here. If they are to give retailers the power to achieve true omni-channel transformation, however, they will need to be integrated into a single platform that combines the ability to fulfil customer expectations at every touchpoint with greatly enhanced and more agile loyalty and engagement capabilities.
On its own, accurate real-time stock-visibility will not transform retail. It needs to be part a unified approach to customer engagement and fulfilment. Only then will the real gains start to flow in to profit column.