RFID and the future of retail

Radio frequency identification (RFID) technology is a way for retailers to identify items using radio waves. It transmits data from an RFID tag to a reader, delivering accurate, real-time information. Perhaps the most familiar example in retail is the security tag attached to clothing items – this is disengaged at the counter, when the customer pays for the item, but if they leave without paying, the tag combines with a reader at the entrance to sound an alarm.

Caswell Mthembu, Business Development Manager at BlueStar, points out that RFID technology offers retailers a wide range of benefits. For one, it improves inventory management by ensuring the store knows exactly where individual items are, and how many such items are available in-store.

“RFID technology also improves the speed of checkouts, which enhances customer service, because a single till is able to handle more customers, boosting operational efficiencies,” he says.

“From a back-end point of view, RFID ensures a retailer is fully aware of what stock is available, what items might require additional stock and what your best and worst sellers are. Because it offers real-time information, it positions the retailer to ensure stock is kept at optimum levels, reducing the impact of over- or under-stocking on a particular product.”

Mthembu adds that with the proper understanding of what inventory is coming in or going out, stores can more effectively plan for seasonal promotions. With clear knowledge of customer purchasing patterns and what products have been most popular during the season, retailers can meet customer demands, ensure effective stock management and discontinue those product lines that do not sell well.

David Forster, BlueStar brand manager for Zebra Technologies, notes that RFID is a relatively easy technology to implement if the retailer already has a WiFi network that connects the front and back end of the store.

“The main issue is whether the retailer’s suppliers utilise the same systems, which will enable them to, for example, pre-tag products with an RFID solution that is aligned to the retailer’s in-house technologies, making the supply chain operate more smoothly,” he suggests.

“RFID offers enormous cost benefits once implemented. Aside from improved stock management, it plays a major role in stock control and employee satisfaction. Unlike a human-led stock take – which is costly in terms of the after-hours wages that must be paid, while also creating space for human error to impact the business – an RFID-driven one can see hundreds of items scanned and checked in minutes.”

In other words, explains Forster, with RFID you can significantly reduce your stock take challenges, saving costs by not having to close your store to perform your annual stock take, while also keeping employees happier, as they can focus on customer interactions, rather than monotonous administration tasks.

“With RFID, there are essentially two types of tags. There are GPS tags that are constantly active, allowing you to always track the exact whereabouts of a product, and are particularly useful for supply chain management. On the other hand, passive tags tend to be security-focused, and are designed only to activate in the presence of a reader, thereby helping to prevent theft within a retail environment,” suggests Forster.

“RFID also plays a key role in the omnichannel experience. For example, there are now smart fitting rooms where RIFD is used in conjunction with other technologies like augmented reality (AR). The AR allows a customer to virtually try on a clothing item in various colours, and this technology communicates with the RFID solution to ensure the customer’s chosen item and colour is available in-store for purchase.”

Mthembu adds that RFID not only assists with supply chain management, but also with the environmental, social and governance (ESG) framework within which most businesses today operate. It can, he states, help with product traceability – in other words, understanding where the product comes from and whether its components were ethically sourced.

“RFID tags can hold a lot of data, certainly significantly more than a bar code can, so it is easy to put enough information into an individual tag to have a clear understanding of where a specific product was purchased from, the place it was manufactured and any other data required for ESG compliance,” he says.

“Other benefits include the constant tracking of items reduces confusion as to when new stock is arriving, which means you can more effectively manage customer expectations around new products and more easily add greater efficiencies to your business operations.”

Looking ahead, Mthembu feels that RFID solutions will increasingly be linked to other technologies. For example, an RFID tag linked to a temperature scanner can ensure that an item that needs to be maintained at a specific temperature is kept at that exact heat. Should anything change, the RFID tag can provide an alert to a floor manager, to make certain that the correct temperature is maintained, or that repairs are affected if something has gone wrong.

“The next big technologies are going to be artificial intelligence (AI) and predictive analytics, which should combine with RFID to enable proactive maintenance, where problems are identified early and repairs can be conducted before the item actually fails.

“In fact, I think this is merely the tip of the iceberg for RFID. Moving forward, we expect to witness a range of integrations where RFID will serve as the foundation solution, on to which a range of other technologies are added to further improve retail operations,” he concludes.