Several developments in the retail sector point to accelerated adoption of RFID technology over the last two quarters of 2014 and into next year.
Some retailers have grown so confident in the technology that they plan to deploy during the upcoming holiday selling season, when unveiling new technology is considered a risky endeavor.
“We’re seeing retailers being very aggressive about implementing during the holiday season,” said Bill Hardgrave, Dean of the Harbert College of Business at Auburn University. “It’s not about taking a chance on the technology anymore. Retailers know RFID works.”
That’s certainly the case at Spanish retail chain Zara, which has deployed to 700 stores and announced this week that it will roll out the technology to 500 stores a year going forward. The chain operates more than 6,000 stores and expects to have them all RFID-enabled by the end of 2016, according to a Reuters report.
Another positive development is the strategy of large multi-brand retailers to escalate pilots and put a larger focus on the importance source tagging. The rapid rollout of RFID at Kohl’s earlier this year is certainly one example; the retailer began piloting RFID in spring 2013 across 25 stores, and rapidly expanded to more than 1,000 stores. The company’s initial RFID deployment is focused on a large number of strategic apparel departments including footwear, denim and men’s basics.
In another promising development, apparel vendors are finally realizing the opportunity to benefit from RFID within their own four walls, instead of simply relying on the promise of selling more products at the retail level.
“Some manufacturers are discovering that they can find enough upstream value now to squeeze enough value out of the RFID program within their own manufacturing and DC operations to justify the cost of RFID tagging, without having to rely on additional sales at the retailer,” says Justin Patton, director of the new RFID Lab at Auburn University.
The big drivers for manufacturers include receiving accuracy, shipping accuracy, pick pack accuracy and electronic proof of delivery. Vendors stand to save money on the manual outbound audits they conduct when goods leave the DC, but the big interest lies in harvesting data from RFID tags to produce evidence to overturn costly retail claims about missing product shipments.
“I have already seen one case where a supplier got a claim from a retailer, and was able to flip that RFID data over to the retailer,” says Patton. “The retailer found the items and the claim was rescinded. That really demonstrates the value of RFID to vendors. This is a valuable tool that they never had before to verify and validate the claims that they receive from their customers.”
Hardgrave says that several major vendors have reached a tipping point and are tagging all of their products, regardless of whether they are being shipped to stores that use RFID. That often turns out to be a pleasant surprise when retailers begin a pilot.
Patton says that when he works with retailers on a new tagging program, one of the first things he does is walk the store with a handheld reader to determine which items are tagged. Last year Patton assisted a major retailer with a pilot for tagging jeans, and discovered that an entire section of men’s dress pants were also tagged, making it easier for the retailer to roll out another category.
“Many times we don’t expect to find anything, but we’ll find almost an entire category tagged,” he says. “We’re getting further and further down that path where brand owners are tagging everything, which makes it much easier for retailers.”
Hardgrave says that the RFID Lab at Auburn, which just opened last month, plans to publish in-depth vendor use case reports to demonstrate how apparel manufacturers can benefit by tagging all products.
When it comes to pilots, retailers are putting more thought into what needs to happen before and after the pilot to result in quicker ramp-up once the pilot is deemed successful.
“I think we’re maturing in our understanding of what it means to pilot and deploy,” says Patton. “A couple years ago, running a pilot meant trying this at a few stores for six months and then look at data and see if it make sense. Today, the large retailers start out of the gate with a pilot, but they want to streamline everything so they can immediately roll it into a deployment.”
Hardgrave says that RFID activity in the retail sector has been stronger than anticipated, with one major deployment just completed and another several large-scale rollouts in the works.