Retail Business Technology Expo 2017: Current and Future Applications of RFID in Retail

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KEY POINTS

  • This week, Fung Global Retail & Technology is in London attending the Retail Business Technology Expo (RBTE) 2017, Europe’s largest retail solutions show. The two-day event showcases the latest technology solutions and their applications in retail. On the first day of the expo, we focused on the retail applications of radio frequency identification (RFID).
  • Leading UK retailers Marks & Spencer (M&S), John Lewis and River Island currently use RFID for inventory management, in particular to increase stock accuracy. They gauge the impact of RFID on their operations by measuring the additional sales generated from improved stock management.
  • Retailers see the integration of RFID solutions throughout the supply chain as the next step. Further applications of RFID technology in stores will enable increasingly integrated solutions that incorporate a number of features and functions in a single tag, including payment solutions, dynamic pricing, real-time inventory, antitheft systems and interaction with other smart devices.

On Monday, May 8, the Fung Global Retail & Technology team was in London to attend the first day of RBTE 2017, Europe’s largest retail solutions show. The event showcases the latest retail technology solutions in areas such as omnichannel, payments, loyalty, supply chain, loss prevention, e-commerce, RFID and analytics.

On the first day of the event, we focused on RFID. We attended a panel discussion in which executives from three leading UK retailers—M&S, John Lewis and River Island—shared how their companies use the technology in their operations, and we visited the exhibitor booths of a number of companies that offer in-store RFID solutions.

 

How Retailers Use RFID in Real Life and How They Will Use it in the Future

RFID is a versatile technology that has a number of applications in retail stores. In the panel discussion we attended, we heard how three leading UK retailers are using the technology to make their operations more efficient. Participating in the panel were Richard Jenkins, Head of Loss Prevention & RFID at M&S; Rob Mitchell, Manager of Stock Management Operations at John Lewis; and Martin Speed, Loss Prevention Manager at River Island. The talk touched on the following points:

  • How RFID technology is currently used in retail operations: The three retailers agreed that the technology is mainly used for inventory management in stores, in particular to increase stock accuracy. Speed said that River Island uses RFID for stock replenishment and to obtain real-time information on stock levels at all times. RFID provides item-level visibility, enabling the retailer to have a unique identifier for each item and to know immediately when something is out of stock. According to Jenkins of M&S, retailers that use RFID increase the level of stock accuracy by 40% compared with competitors that do not use it.
  • How to measure the benefits of RFID: Jenkins and Speed said that the best way to gauge how the use of RFID in inventory management impacts operations is to measure the additional sales generated from improved stock management. Jenkins added that taking only topline sales as a measure is problematic, because many other factors—including seasonality and changing consumer preferences—come into play, which means that higher stock accuracy does not always translate into increased sales. Therefore, retailers must take those other factors into account when measuring RFID’s impact on operations.
  • The next step in the application of RFID in retail: The three panelists agreed that, although RFID is mainly used for in-store inventory management today, the next step would be the application of RFID to the supply chain and logistics. This would help retailers increase item-level visibility throughout the entire product lifecycle, enabling further distribution-center inventory accuracy and more efficient management of returned items.

The talk concluded with a note on RFID applications for loss prevention. While Jenkins said that M&S does not use the technology for loss prevention, Speed said that River Island sees opportunities in using RFID to test new forms of security tags. Since RFID-enabled sensors can gather data in real time, they could help retailers quickly identify which loss-prevention solutions work best.

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In addition to attending the panel discussion, we spoke to executives from two exibiting companies—MishiPay and MariElla Labels—which provide retailers with RFID-enabled solutions for their brick-and-mortar operations.

  • MishiPay provides a solution that eliminates checkout lines. Its technology enables a shopper visiting a physical store to pay by credit/debit card or Apple Pay after scanning an item through an app. Once the payment is complete, the RFID tag attached to the item is deactivated, and the customer can walk out of the store without triggering the antitheft alarm system.

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  • MariElla Labels offers a smart price tag, EllaFashion, which uses RFID technology for dynamic pricing, allowing retailers to change the price of an item in real time. The tag also tracks the item to which it is attached, enabling real-time inventory and antitheft features. Moreover, the tag can activate devices, such as connected mirrors in fitting rooms, that interact with shoppers and provide them with further product information and relevant advice.

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These examples of RFID applications show how different solutions can be merged into fewer and smaller devices (such as price tags) and how using RFID can help retailers significantly improve in-store conversion by solving problems such as shopping-basket abandonment. The executive from MishiPay shared some figures that quantify the problem: 70% of shoppers would rather not buy something than have to wait in line for five minutes to check out, and the total sales lost from customers abandoning their carts due to checkout lines is estimated to be $200 billion globally.

 

Key Takeaways

Our main takeaway from the first day at RBTE 2017 is that leading retailers in the UK are still using RFID technology mainly for inventory management and stock accuracy improvement. The next step will be the integration of the technology throughout the supply chain to increase item-level visibility in distribution centers and improve the handling of returns. Future in-store applications of RFID will enable increasingly integrated solutions that combine, in a single tag, functionality that ranges from payment solutions and dynamic pricing, to real-time inventory, to antitheft systems and interaction with other smart devices.