RFID in the Retail Industry


Imagine a shopping cart equipped with a scanner and a touch-screen computer that acts as a virtual personal shopper. As you scan items and put them in your cart, the computer offers information about each product and suggests complementary items. The computer keeps a list of the items in your cart with a running total so you know exactly how much you’re spending. When finished shopping, you head to a self-checkout stand or to a cashier. Because your items are already totaled and bagged, the wait time is minimal. All you have to do is pay.

The power behind this hassle-free shopping experience is radio frequency identification (RFID) technology. RFID is helping retailers around the world improve customer satisfaction and increase sales. The technology is transforming the retail industry by offering retailers real-time visibility into inventory and product movement to improving store productivity and loss prevention. Many of the world’s largest retailers have mandated RFID tagging by 2005. This move affects more than 200,000 manufacturers and suppliers, driving the worldwide market for hardware and software to support RFID.

Here are just a few ways RFID is improving efficiencies and creating a better customer experience in the retail industry.

RFID Helps Improve Inventory Management

Inventory control is often a costly, time-consuming process for retailers. By offering real-time inventory visibility, RFID enables companies to monitor and control inventory supply at all times. By automating the inventory tracking process, stores can keep costs down by maintaining optimum inventory levels-avoiding stock-outs and eliminating unnecessary orders. Tracking capabilities also make it easier to predict product demand. Stores can monitor quick-selling items with increased accuracy, ensuring that their inventory supply is stocked accordingly.

Improving Customer Service

Satisfied customers mean better business for retailers. By using RFID, employees can identify the exact location of any retail item at any time. Customer requests can be handled quickly and easily through access to a centralized database. RFID-tagged items offer store-to-store visibility, so items can be located immediately with the touch of a button. This level of product accessibility results in shorter wait times for customers and offers a better shopping experience. Improving overall store efficiencies ultimately results in greater savings to customers.

Boosting Customer Loyalty

RFID can be the personal shopper of the future. By using RFID technology, retailers can collect information about their customers’ purchasing trends and offer rewards targeted to those interests. RFID can identify a customer, call up an account history, and enable the retailer to provide value-added services to help create a personalized shopping experience. For example, one clothing retailer in New York is using RFID smart labels to store information about each item in the store, such as fabric content, available sizes and colors, and suggested complementary items or accessories. RFID readers in the fitting rooms are connected to computer monitors so customers can view all the information and make decisions-without ever having to leave the fitting room. And, because privacy is a primary concern, advanced security technology helps to protect all information. Participation is optional for each customer.

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Comments (13)

  1. matt says:

    "By automating the inventory tracking process, stores can keep costs down by maintaining optimum inventory levels-avoiding stock-outs and eliminating unnecessary orders"

    They’ll need it to pay for those $3000 electronic shopping carts that everyone keeps running over in the parking lot. 😉

    Nice dream. The reality will be much closer to what we have today. Most of the benefits listed in the article will be made possible by connected systems, not by RFID. Only one or two of the things listed are a direct result of RFID. The rest is just the retail industry finally coming up to speed on real-time connectivity.

    A very typical hyped-up futuristic view. Keep up the good work… we’ll get RFID pushed through yet (whether it’s beneficial or not).

  2. No one of consequence says:

    Imagine a grocery cart that reads RFID tags of items on the shelves you’re walking past, and nags you to buy things you don’t want.

    "Say, I notice you’re heading down the liquor aisle" – because it’s the shortest route to the checkout – "how about a Guinness?"

  3. matt says:

    And what kinds of bateries do I need to power that grocery cart all day long so that it can be used by multiple patrons? Maybe we will just all walk around the store with a 600ft. long extension cord to power the speaker and LCD panel that the original article mentioned?

    Seriously… sounds great. Sounds expensive. Show me the real ROI for those $3000 grocery carts that do little more than simply state: "how about a Guinness?". Imagine your local Walmart with 400 of those bad boys on a busy saturday. $1.2 Million per-store investment that needs to be maintained and secured so that we can automatically ask someone if they want bateries for their new alarm clock?

    A $5.00 shelf display containing the technology found in today’s greeting cards can automatically ask everyone that passes by if they’d like a Guinness. It may not be quite as effective but the ROI will be much easier to prove.

    I could go on and on about how the original article was complete marketing fluff. Since when did RFID claim to automatically bag your groceries or give you real time inventory at another store "with the click of a button"? Software does that, not RFID. RFID just makes the numbers more acurate (so they claim). We can even do that today without RFID.

    RFID will certainly bring advantages to retailers in terms of inventory control. And yes, the changing room idea is pretty cool… but don’t expect your shopping cart to talk to you and display pertinent information to you anytime soon. The cost is simply too high and half of the carts would end up broken in a month. The ROI won’t be there. And you really don’t need RFID to make that happen anyway. But it’s nice to dream.

    20 years ago people would have said you were crazy if you told them that every seat in an airplane would have an LCD screen in it that let you watch in-flight movies. Now if we can just get them to turn the darn things on… another great idea succombs to low margins.

  4. No one of consequence says:

    Who needs batteries? Just put little generators in the wheels of the shopping carts.

    Customers won’t mind working a little harder to push their groceries around, will they? Especially if it means the central scrutinizer can beam commercials straight to them as they shop.

  5. Mike Arthur says:

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