How RFID is affecting retail business As the use of RFID at the item level accelerates, retailers are exploring further ways to leverage this technology to increase profitability.

According to Gartner, the penetration of RFID technology in the retail market is between 5% and 20% of the target audience. Let us consider how RFID affects business and which factors act as the main drivers of its penetration.

Research and consulting firm Gartner, which specializes in information technology markets, has published an article in which it named RFID as one of the main transformational technologies for retail in the next 5-10 years.

Impact on business:

  • Improves inventory accuracy by more than 97%.
  • Provides real-time visibility into inventory in the supply chain.
  • Increases the speed and efficiency of store employee workflows.
  • Reduces losses, and accurately identifies counterfeit products, thereby reducing the likelihood of fraud.
  • Increases customer loyalty and retention through greater customer interaction by combining online and offline offerings.
RFID

Drivers:

  • Supporting task optimization in the retail store, including inventory visibility and accuracy is a major area of cost optimization that retailers must address urgently.
  • RFID significantly improves in-store employee interaction by reducing time spent on time-consuming tasks and distributing it optimally.
  • At many retailers, more than 50% of online orders are fulfilled from stores. Ensuring inventory availability and accurate order picking is critical.
  • The demand for an integrated approach from customer checkout to the point of receiving the purchase in-store will drive the need for efficient in-store picking processes – as retailers add duplicate stores with shared inventory and logistics. RFID can drive success by effectively locating items to be picked and delivered.
  • With RFID, real-time visibility of products and understanding of their characteristics, as well as assortment and distribution adjustments can be done faster and more accurately. This data is also highly sought after by suppliers and manufacturers.

Retailers continue to struggle with real-time transaction visibility and analytics issues that limit their ability to bridge the gap between the physical store and digital channels.

Some areas, such as groceries, convenience goods, pharmaceuticals, cosmetics and care products, are slower to adopt due to readability issues with tags placed on metal containers, liquid products or in environments with varying temperatures (hot, cold, humid).

As tag technology continues to improve, so will RFID adoption.

RFID Technology

Conclusions for retailers

Store investment in RFID technology to streamline unified commerce operations has propelled this innovation forward in 2021.
The projected timeframe is still 5-10 years, with some retail segments well ahead of that schedule.

Given that Gartner is based on an analysis of the most advanced markets and concludes that even there the coverage of the potential audience of RFID is only up to 20%, we conclude from the considered that the use of RFID can be a great competitive advantage for those who first implement related technologies. It is quite expected that over time all retailers will actively use RFID systems.

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