Fulfilling the Promises of RFID

A few years ago, talk of RFID technology was all the rage at retail. The radio frequency identification tags were mandated and implemented by several major retailers at the case and pallet level as a supply chain and warehousing tool. The promise was that it was just a matter of time before RFID tags found their way to the sales aisle to improve inventory practices, reduce slippage and lower out-of-stocks. But cost per unit, infrastructure cost and privacy concerns slowed the widespread use of the technology at the item level.

In a recent guest column in DSN Retailing Today, Mark Hill of Avery Dennison makes the case that wide-spread item level RFID implementation is not a matter of cost, but a matter of return. Hill says that the real ROI of RFID comes at the item level. Several large retailers such as Walmart, J.C. Penney and Macys have done the testing, fully understand the benefits and are moving quickly toward roll-out.

The benefits of item level RFID come in the areas of inventory accuracy, increased sales, improved loss prevention, reduced inventory levels and vendor fraud. The column says that a typical retail stock level that is 65 to 80 percent accurate at the SKU level, can be 99 percent accurate using RFID technology.

For members of the at-retail merchandising and marketing service industry, widespread implementation of item level RFID technology can have major implications. An enhanced ability to know exactly where product is can make our services even that much more valuable and efficient in the store. First, there is the roll-out phase which certainly could require additional at-retail support. Next, while RFID can help to better understand out-of-stocks, it cannot physically merchandise shelves, cut-in new items or build displays. A working knowledge of RFID technology and its potential uses at store level could be a tremendous advantage for the NARMS member in the near future.