Radio Frequency Identification (RFID) technology

RFID technology

Why it's important to the consumer industry.

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Warehouse

"With the boom in omnichannel and online shopping, it’s more important than ever to know where your stock is."

Julio Hernandez, Global Customer Lead for KPMG’s Customer Centre of Excellence

Radio frequency identification (RFID) will revolutionize the availability of stock and reinvent the shopping experience. Offering complete visibility of inventory, stock can be located anywhere in the supply chain, helping customers find products faster, eliminating shrinkage and reducing theft. Although RFID has long been used by the consumer industry to track inventory and shipments, the application of this technology to individual products is what will really make the difference. 

RFID is made up of a smart electronic tag, which contains a unique number that describes the product; a reader, which sends a radio signal to the tag; and a central database. The reader sends the tag’s location, and a date and time stamp to the database and, based on this knowledge, inventory is tracked.

Stores around the world have deployed RFID. Footwear retailer Deckers Outdoor Corporation, through its UGG Australia stores, and athletic retailer lululemon are using the technology to give customers access to online inventory. 

RFID is even helping e-tailers into bricks-and-mortar stores. In New York and San Francisco, eBay has collaborated with fashion company Rebecca Minkoff, providing the technology for ‘magic mirrors’ which use RFID to identify items in changing rooms. These mirrors can then show alternative sizes and colors, and offer intelligent recommendations. This opportunity to cross-sell and up-sell toconsumers helped eBay report profits of US$622m between March and June 2014.

In the future, consumers will be able to instantly buy these items, reducing wait times at checkouts and enhancing the retail experience. RFID can also be linked to loyalty cards and apps, but RFID alone cannot transform the customer experience. There is more value when it is underpinned by data analytics.

Andy Robson, GS1 UK Supply Chain Solutions Manager, says standardization is imperative: “It allows retailers to talk to their suppliers wherever they are in the world. They can ask suppliers to fit electronic product code (EPC) tags, confident that it can be read wherever they are in the supply chain.” 

Auburn University, which runs an RFID lab in Atlanta, US, estimates that RFID’s return on investment is one to four years. Marks and Spencer, which has been using RFID for 12 years for general merchandise, has evidenced that there is a clear ROI. “General merchandise is the key driver for RFID but as sustainability becomes more important there will be applications in the grocery industry too. RFID could be used for expiry date management, cutting the need to manually check stock.”

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