Radio Frequency Identification (RFID) technology isn’t new. It has been around for decades, solid and dependable, tracking processes and products in a variety of industries from automotive to pharmaceutical. Now it is coming back into the spotlight as a crucial enabler of the Internet of Things (IoT) for retailers of all sizes. 2017 is set to be RFID’s big year, with industry analysts already heralding it as the ‘killer app’ in the IoT retail ecosystem.
The powerful benefits of RFID have been known for some time, but the relatively high cost of active RFID tags and readers and the inability of many companies to extract useful data have held the technology back from reaching its true potential in the retail sector. But that is all about to change alongside the advent of the Internet of Things (IoT).
Active RFID tags have a transmitter and their own power source, normally a battery and automatically broadcast their signal. Passive tags do not have a power source. They only transmit a signal when they receive RF energy sent out from a reader near the tag.
Active RFID tags, used to identify and locate retail assets and supply data in real-time globally, are now at a low enough price point for mass deployment by retailers and their beauty is they can integrate easily into IoT systems and analytics, according to analyst firm Juniper Research. As well as uniquely identifying the object, active RFID tags enable the object to wirelessly communicate data. At its most basic it supplies data on ‘the thing’ scanned. Coupled with sensors and GPS, it can provide detailed information on ‘the thing’, enabling it to be tracked over its complete lifecycle.
Key growth areas for RFID include inventory management, monitoring customer behavior, loss prevention and omni-channel retailing. A growing list of US stores have introduced aggressive RFID programs including Macys, Walmart and Target. As well as enabling them to better track inventory and keep stores stocked, Target believes RFID tagging will better enable it to fulfill online orders to be picked up in store.
Innovative retailers such as Rebecca Minkoff have combined RFID with smart mirrors. “Integrating these systems allows real-time information to improve the store experience and bridge physical and virtual worlds - in this case, the concept drove a 200% increase in sales,” explains Juniper Research analyst Steffen Sorrell.
UK-based luxury shirtmaker Thomas Pink has launched an IoT pilot at its New York store, featuring ultra-high frequency (UHF) RFD technology to track the movement of its products in real time through the business, increasing efficiency and delivering nearly 100 per cent stock accuracy.
“The solution will give us insight to ensure that we have the right products in the right places at the right time, all of the time. This is fundamental to delighting our customers and delivering great new digital experiences in the store,” explains Alex Field, marketing director, Thomas Pink.
Tagging ‘things’
The price gap between passive and various active RFID technologies has narrowed considerably, opening up opportunities for IoT retail applications. Passive RFID tags have no on-board power source and draw their power from the reader. Active RFID tags have their own transmitter, power source and sometimes sensors. Previously, active RFID, which can be scanned over much longer distances was deemed too expensive for lower cost items.
European food retailer Eurocash Group is using an active RFID-based solution to manage the temperature of its coolers at its Polish stores and warehouses. The technology will monitor the temperature of all the company’s dry, fresh and frozen products as they move through the supply chain to stores to ensure a high level of product quality when it reaches the customer.
RFID boosting omni-channel
Early adopters are already utilizing RFID to optimize their omnichannels, providing a smooth retail experience for the customer whichever route they take to make their final purchase.
Customers at shoe retailer Store of the Future in Florence, Italy can automatically view information about shoes and accessories as they try on shoes in the store, enabling them to select shoes not available in the store and purchase them online.
The store is using a high frequency UHF RFID-based system that encompasses smart fitting room technology and inventory management. Customers can view information about the shoes they are trying on via a tablet. They can also request assistance, purchase the shoes they are trying on or buy them online from their personal screens. Store assistants have a retail time view of inventory.
Looking ahead
The sale of passive UHF RFID tags will top 10 billion in 2017, driven by the high return on investment retailers are seeing form the technology, according to supply chain analyst firm ChainLink Research.
Consumers will increasingly expect retailers to deliver customized service and offers, based on the personal information they have provided, which RFID technology will help fuel. RFID data combined with other data such as traffic counting and purchase history information will provide stores with a granular understanding of their customers and shopping habits, enabling them to personalize and improve the customer experience.
RFID’s day in the retail sector has come. Its ability to identify what is happening on a specific object at a specific time in a specific place is going to make it an essential cog in the IoT ecosystem.
Digital technologies are impacting all areas of business and society, pushing companies to re-think their processes as our world becomes increasingly connected. Read more here.
Jan has been writing about technology for over 22 years for magazines and web sites, including ComputerActive, IQ magazine and Signum. She has been a business correspondent on ComputerWorld in Sydney and covered the channel for Ziff-Davis in New York.