11 September 2014
RFID technology dates all the way back to the 40’s but didn’t gain commercial traction until the 80’s. High value items like rolling stock, automobiles and livestock were early adapters in RFID tracking, but the expectation was retail would inevitably become the largest market.
RFID appeared to finally hit its stride in retail in the 2000’s as Wal-Mart laid out plans to have all its suppliers apply RFID tags to pallets and cases of goods sent to its DCs. After consistent delays and pushback from suppliers who balked at the high cost of implementation, Wal-Mart changed its RFID strategy in ’08 to only focus on in-store RFID solutions.
So will RFID ever become the go-to for retail inventory tracking, both in the warehouse and in-store?
The falling cost of deployment, including passive tags at ~$0.10 (with volume) should help the ROI argument. And more importantly, brick & mortar retailers have realized that one of their best ways of competing against ecommerce players is by improving the “omni-channel” experience and using their physical footprint as a strategic advantage.
Software solutions (inventory management, warehouse management, etc) can solve much of a retailer’s inventory visibility needs, but can’t track where within a store the inventory can be found (and aren’t necessarily real time). Barcode scanners aren’t efficient for this type of task because they require close proximity and line-of-sight but RFID reader’s Geiger counter-like functionality can be the perfect solution.
In practice, RFID allows retailers to do frequent inventory checks and easily locate the blue striped 16 X 34 dress shirt ordered on the web for store pickup. The combination of ordering online and pickup from store isn’t a shopping experience that Rue La La, Zappos and even Amazon can match.
Omni-channel pioneer Macy’s understands this opportunity set and has been testing RFID tech in store since ’09, with full rollout across its store base & vendor network by next year. Other top tier retailers with announced RFID rollouts include: Inditex (Zara), Kohl’s, Saks and American Apparel.
This increased interest will lead to explosive growth in the market; IDTechEx research forecasts retail RFID spend to increase from $400M in ’13 to $8B by 2024. Established players like Avery, Checkpoint, Tyco and Zebra/Motorola should all be beneficiaries of this increased demand. And a startup like U Grok It, which has created low cost RFID readers (that attach to smartphones) may grow the addressable market by bringing RFID to SMB retailers.
Despite being available for decades, RFID solutions never really hit their stride in the retail vertical. This, however, appears to be changing as the argument for deployment no longer just centers around supply chain efficiency & shrink, but now can incorporate uplift from omni-channel sales.