The Case for RFID in the UK Retail Sector
The adoption of RFID in the UK retail sector has had a longer incubation period than expected by many, and hoped for by providers of RFID solutions. For a long time, the costs of implementation have restricted its applicability to a few major players and even there it has only been implemented on a small proportion of particularly high value and complex goods – the classic example being Marks & Spencer’s gentlemen’s suits. Recent successes and claims of RFID driving increased revenues at retail outlets in Germany and Italy are sparking new interest. Tagging costs have fallen considerably in the last few years, and business cases are suddenly starting to stack up. The balance is beginning to tip in favour of widespread RFID adoption – a number of trials are planned in fashion and luxury goods across the UK retail sector.
This paper demonstrates that RFID will enable UK retailers to tackle two very important issues. First of these is the potential RFID gives retailers to move away, for the first time, from ‘good faith’ receipt of goods at warehouses and distribution centres. Because bar codes require line of sight scanning, it is not operationally viable for retailers to check that packages delivered to warehouses contain what suppliers say they contain. Currently retailers in all the sectors researched for this study – from fashion through luxury goods to high value electronics – rely on spot checking and sampling of deliveries. The more reliable the supplier, the less frequent the sampling. Accurate RFID reading of multiple tags on arrival at the warehouse could make sampling a thing of the past, and also radically transform the need for regular stock taking.
But it may be in-store stock availability which finally drives UK retailers to adopt RFID in earnest. The growth of on-line retail, with its availability promise, has meant customers’ expectations about availability in-store have risen. Traditional retail channels need to respond to remain competitive. This means improved stock information, real time analysis of buying trends, and a new level of responsiveness in stock replacement. Plus retail managers want evidence that stock delivered to store is actually on the shop floor, not languishing in the stock room, creating a perception of non-availability to customers which is now unaffordable.
These two issues outweigh all other advantages of RFID from a security or shrinkage perspective – most retailers already have systems in place to address these issues – and few have the appetite or the financial wherewithal to switch out existing security systems. Targeted RFID implementations at the point of delivery to the warehouse and at the stock room / store interface are likely to realise real returns in terms of accuracy and ability to satisfy customers and close those all important sales.
Retailers with hands on experience of RFID implementations are aware that achieving the kind of accuracy which is associated with RFID is not necessary a given – particularly for complex goods (such as pots of paint, which may have both a high metal and high water content) in metal rich environments. Recent research by Arkiris, the innovation team at Exeter University, has shown that careful management of the environment around the RFID reader results in dramatic improvements in reading accuracy – and an ability to achieve the 100% stock accuracy all retailers dream of.