Blog | Retail and Consumer Packaged Goods

What is RFID and Why Retailers Should Be Using It

RFID operates by using electromagnetic fields and radio waves to automatically identify and track digital data that’s encoded in tags or smart labels attached to objects.

SEPTEMBER 18, 2018

Video may have killed the radio star, but radio is saving the retail industry…radio-frequency identification (RFID) that is. RFID operates by using electromagnetic fields and radio waves to automatically identify and track digital data that’s encoded in tags or smart labels attached to objects. Think of it as a next-gen evolution of barcoding, whereby data from a tag is scanned, processed and stored in a database—the only difference being that RFID tag data can be read outside the line-of-sight as opposed to barcodes which need to be aligned with the appropriate scanner in order for the transaction to work.

Why Retailers Should Be Riffing on RFID

Retailers are adopting RFID at astronomical rates and using this technology to enhance their operations, improve inventory management and transform a customer’s experience, particularly at checkout, for the better. Thanks to its ability to handle data via radio waves, RFID is essentially a technology requiring no human intervention. This, in turn, is allowing forward-thinking retailers to create automated checkouts and revamp customer engagement at the Point of Sale (POS) for quicker, more accurate and advanced sales journeys without the current friction that makes online shopping a much more attractive avenue today.

In addition to making the customer experience at checkout more automated and efficient, savvy retailers are getting creative with this technology and developing fun, interactive customer experiences. Everything from customized music and lighting to touchscreen outfit builders to virtual memory mirrors that offer a 360-degree of an outfit without even needing to try it on are springing up—all powered using the data from RFID tags. This sort of personalization and “gamified” approach to shopping is leading customers back into brick and mortars because the customer journey is now more enjoyable and novel.

Though RFID technology has existed since WWII, it’s growing popularity in retail is all thanks to Wal-Mart, which requires all of their suppliers to make their products be traceable by RFID. This sort of inventory management is proving extremely beneficial, with retailers being able to keep better track of items in transit to ensure they always have the products customers crave readily available. RFID can also help facilitate greater levels of accuracy on inventory stock counts and a more comprehensive picture of their on-hand inventory.

Why Retailers Should Be Riffing on RFID

With RFID providing this enhanced view of inventory and more in-depth data tracking, retailers can circumvent shrink, which often arises due to a lack of data or data inaccuracies. Shrink—or lost and stolen items—can create numerous problems for retailers, including missed sales opportunities and lost profits. RFID provides greater visibility and more accurate data to ensure retailers can lessen the impact of loss prevention and shrink—huge pain points for merchants and customers alike.

Those going all-in on RFID are starting to expand its capabilities in order to support Internet of Things (IoT) deployments as well. The combination of RFID with smart tags, sensors and GPS technology enables a wealth of data and information to be wirelessly transmitted and delivered to retailers in a matter of seconds. All of the benefits that RFID offers are ushering in a new era of retailing where technology and commerce are playing off of each other in exciting, innovative and creative ways that ultimately lead to vast improvements in the customer experience. It’s no wonder more and more retailers are turning up their radio frequencies.

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