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RFID is everywhere. Or is it?

According to a research conducted by GS1, RFID adoption in retail business has reached a tipping point as more than half of surveyed retailers are now implementing EPC-based identification in their operations. Can we draw conclusions - are half of retailers using RFID?

In order to say so, we need to go a bit deeper and show some facts and figures. The GS1 RFID report material consists of 177 apparel and general merchandise company interviews, and 47 percent of them states that items they receive do carry RFID tags. The report also states that, in addition to the number of 57 percent already using EPC-based coding, 21.1 percent of the surveyed retailers were planning to implement the technology between the next 13 and 24 months. According to ABI Research, it is estimated that in 2015 Retail will become the single largest RFID sector, Moreover, in the apparel industry, tagging grew to 3 billion RFID labels in 2014 and is seen to grow more than 8 billion in 2016 ( IDTechEx).

GS1 has explained some reasons for the interest. The most critical reason is that RFID is seen to enable Omni-channel retailing as it can both identify and locate items. From the manufacturer's side, nearly half of the surveyed ones were currently implementing RFID, and more than 18 percent were planning to implement the technology in the next 12 months. Also, the RFID adoption is shifting from Tier 1 to Tier 2 companies - more than 50 percent of Tier 1 retailers are now deploying RFID. 

Woman Looking At Clothes

Putting facts into practice

The GS1 report results are very encouraging for the RFID business. There are different kinds of RFID solutions available for retailers, from which they are able to build an efficient inventory system inside their premises. RFID also simplifies tracking items from the location where they were tagged - whether the tagging place is the factory, DC or the store itself, RFID helps the retailer to know where the item is located.

From the Omni-channel perspective, online sales and brick-and-mortar stores are increasingly bringing their backroom stocks into one large centered stock, from which the items are sold to the customers. As RFID gives real-time data of the items in stock, the stock is constantly updated. Moreover, customers in both online stores and brick-and-mortar stores know which items are available, and out-of-stocks are seen to decrease due to the use of RFID.

Who is the lucky one to benefit?

A large part of garments are already carrying RFID tags, which is an important fact for retailers having multiple suppliers. When simultaneously handling a large number of items coming in from different distribution centers, item-level identification eases the operations by telling the retailer which items have been received and from which DC. Furthermore, RFID enables tracking and tracing individual items through the whole supply chain. Some brands equip all of their garments as the largest number of the clothes end up in department stores where the RFID is already in use. Cost-wisely it is easier to tag all the items than maintain two lines in the production where the other tags the garment and the other does not tag.

In order to work as planned, an RFID system requires the RFID readers, the tagged items and a backend system which together provide the data. Miia Kivelä, Area Sales Manager at Nordic ID, confirms that for a retailer, it is easier to shift in using RFID technology if the received items are ready-tagged. When the items are tagged beforehand, the retailer only needs the RFID readers and the backend system. Also, the retailer self then needs to tag the remaining items.

But who is the one carrying the decision of RFID tagging? Kivelä states that there are different approaches for the tagging procedure: "Who decides about the tagging - it is a good question. Mostly, the tagging decision comes from the party who faces the issue of not carrying the RFID tags. Of course there are some other aspects for the tagging, for example who pays the tagging procedure, who does the actual item-level tagging, where the items are tagged, and how the items are tagged."

Ties In Store

If a large department store decides to go out for RFID, they either can equip the whole store and every single product with RFID, or then they can select some departments and product groups. If the department store is willing to tag every piece, it is a massive challenge from many aspects. Kivelä lists some of these aspects: "The first challenge is that usually a department store sells multiple brands. They also have multiple pricing categories. A question is whether the store owner contacts the brand owner and negotiates about the tagging, or implements the tagging at a DC of their own. If a brand owner implements the tagging, it is of course much more convenient for the retailer as one brand more arrives in as tagged."

What can we conclude?

The GS1 report shows that 47 percent of the surveyed retailers were already receiving their products carrying RFID tags. This research was implemented in the USA, and cannot be generalized as the status of RFID business varies in different continents. But, still it can give some directions of the trend in RFID tagging.

As can be concluded, the tagging itself arises some questions but also brings some answers. A successful RFID implementation and item-level tagging bring benefits for the retailer as the stock is constantly up-to-date.

Miia Kivelä

Miia Kivelä, Area Sales Manager at Nordic ID

1 comment on “RFID is everywhere. Or is it?”

  1. Posted 19 June 2017 at 10:34:29

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