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Target and Amazon seek different goals from RFID

Last week was monumental for the RFID industry, with retail giant Target and online behemoth Amazon unveiling major RFID initiatives within 24 hours.

Which announcement will prove more meaningful? Target’s goal to deploy RFID to all 1,795 stores by the end of next year is a massive undertaking and a strong signal that there is a solid business case for RFID among discount retailers. The rollout will likely consume more than one billion tags annually during year one.

Target is spending $1 billion on supply chain and technology upgrades in 2015, and it appears RFID will consume a good portion of that budget. Target’s rollout is expected to be the largest retail deployment by the end of 2016. Initially, the retailer will tag times in three categories, including women’s apparel, baby and kids clothing and home décor.

Target will tag women's and children's apparel at all 1,795 stores by the end of next year.

“When you think about the number of stores and the number of categories, it’s a lot of tags,” says Bill Hardgrave, dean of the Harbert College of Business and founder of the RFID Lab at Auburn University. “The initial tagging for 2016 is probably just the tip of the iceberg. I think they will move into other categories very quickly, probably exponentially, because the infrastructure is in the store.”

Amazon’s decision to team up with the RFID Lab at Auburn could have major implications. Amazon will begin working with the RFID Lab next month to research how to best tag items as they enter the DC, and potential use cases for how to use those tagged items before they are shipped to customers.

The goal is to discover new processes for RFID within Amazon’s vast supply chain, which includes 100 distribution centers around the globe.

Amazon is a leader in adopting supply chain technology. Expect he company to act swiftly if it likes what it sees from its research at the RFID Lab, which should conclude by the end of the year.

Amazon has made aggressive moves in the past, purchasing materials handling robot maker Kiva in 2012. Amazon is also aggressively studying the use of drones as delivery vehicles. While its plan for RFID is to increase supply chain efficiencies, don’t be surprised if tagging eventually plays a role in the delivery process.

Hardgrave says that both announcements represent significant steps forward for the industry.

“They are both noteworthy for different reasons,” he said. “Target is big because it is a major retailer that goes beyond the apparel and house goods categories. When you think about the possibilities within Target, it is very intriguing when a store of that size starts to tag items.

“Amazon is intriguing because as we move into omni-channel, the pure online retailer is threatened because they are just one channel. We’ve seen Amazon put in physical facilities in Manhatten and elsewhere so they have that physical presence to make deliveries in an hour. What this shows is that even online retailers that are very good see the potential to be even better. As good as Amazon is, they see RFID as a possibility to be even better.”

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