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Implementation of RFID has had a record last decade or so in the retail sector, with more than a billion tags being used in 2014 not only in apparel but also in other categories and uses. The use of RFID in retail has encompassed some exceptionally innovative and high-value applications and while the potential offered by this technology in this sector remains enormous, paucity of concrete evidence as to what is actually being done still remains.

In the face of RFID technology developing rapidly, the retail industry has undertaken several pilot studies and after careful consideration identified areas where it can be deployed most effectively. Interoperability across supply chains has been facilitated by the establishment of standards. The performance of RFID technology has improved by leaps and bounds, with costs coming down drastically on a simultaneous basis, as is indicated by item-level tag costs amounting to one-fifth of what they were in the early 2000s.

In a survey undertaken to know the major reasons for retailers implementing RFID technology, the top answer cited was improving inventory accuracy. This is a highly sensible approach on the part of retainers, since enhanced levels of accuracy in inventory has a discernible impact on boosting sales, in addition to driving several other benefits and goals for RFID. RFID facilitates a 25 times faster cycle counting compared to conventional bar code scanning and frequent and precise cycle counting enables in improving inventory accuracy typically by about 20%-30%, helping several retailers in achieving 99% precision in inventory accuracy. This, in turn, allows the reliable generation of replenishment alerts to increase on-floor availability and decrease out-of-stocks, as a rule by about 15%-30%. The combined outcome of these enhancements translates into sales increases in the range of 1% to 10% or even more, depending on the categories of products.

Several retail businesses have expanded RFID implementation with the sole purpose of identifying and correcting inaccurate inventory in the system. This gains criticality when it is assumed that there is stock in the store, though the reality is quite the opposite. In the event that inventory may not be replenished even for weeks or months, this period of time results in lost sales opportunities. The essential core financial driver of a majority of RFID implementations in retail is the consequent expansion in sales, which is illustrative of the pivotal significance of improving inventory accuracy and decreasing out-of-stocks.

The second part of the above mentioned survey involved getting responses to the question of what the retailers are using or planning to use RFID for. Here, the most common reason given for implementation of RFID turned out to be loss prevention in stores as an in force or planned measure. However, this cannot be termed the prime driver of RFID implementation by retailers, since the survey asked retailers to check all reasons applicable from a detailed list. As a result, it was observed that while use of RFID is prevalent for loss prevention, it has in most instances been combined with the technology’s application in inventory accuracy/replenishment. The comparative significance of inventory-based RFID applications is substantiated by the response “item-level replenishment from back stock and cycle counting in stores” running a close second to loss prevention as the most widespread application of RFID. Except in cases of very high-value products, such as jewelry, RFID implementations are not commonly vindicated on the basis of preventing losses alone.

One pattern that has been commonly observed in RFID implementation by retailers is that the primary intention of doing so has been return on investment for a prime use case that typically comprises inventory accuracy, reduced out-of-stocks and increased sales. After RFID is implemented for this purpose, retailers are prone to look at other possible uses and benefits, with loss prevention taking the lead here. However, other issues, particularly the ones associated with supply chain, have also been figuring prominently in the retailers’ reasons for RFID implementation. This is borne out by the use of RFID in the distribution center for verifying goods receipt, picking, packing and shipping that was the choice of 40% of the respondents, with more than 30% using the technology for tracking goods from the source.

The process of screening the list of a wide range of use cases for RFID leads to the fact of considering diversity in the types of retailers, store formats, operational models and product categories, in which each combination has different use instances that are the most feasible for them. About 30% of the respondents make use of this technology for in-store fulfillment, as also for letting store associated check for item availability, location, price and other information. This signifies the importance of RFID as a component of an Omni-Channel program. Another fact worth noting is that while tagging at source is highly prevalent, a large number of retailers up to nearly 25% are tagging items in-store.

Over 20% of the respondents have given priority to product authentication, which is more applicable in the domain of luxury goods, such as high-end handbags. Some private label retailers have implemented RFID for sample management for trying to streamline and compress the upfront development process. It has also been observed that private label retailers have a greater inclination to undertake source-to-store tracking through RFID.

While a few retail pilot studies of RFID have involved display and promotion management, home delivery and warranty, widespread implementation is yet to take off. Ecommerce providers have been engaged for some time now in exploring the possibility of using RFID for home delivery, with a special focus on large complex deliveries that require onsite assembly and installation, for ensuring precise picking and optimized logistics processes, such as accurate sequence of truck loading and confirmations of delivery.

Industry Experts has today released the new market research report on RFID. As per the new global report ‘Global RFID Market – Readers, Tags, Software and Services‘, Software & Middleware is expected to be the fastest grwoing RFID product segment with a 2014-2020 CAGR of 22% to reach a market worth US$7.9 billion by 2020. RFID Tags estimated to be the largest segment with 2015 market reaching to US$4 billion.

For more information please visit: http://industry-experts.com/verticals/other-reports/global-rfid-market-readers-tags-software-and-services

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