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A review on Technology and Innovations in Retail Industry (Part 1: RFID)

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Shahidul Kader,

PhD Candidate, Auburn University, USA

Technical Editor, Textile Focus

 Introduction

One of the major consumer product in the retailing market is clothing. By 2018 the clothing retail industry is about to reach $340 billion only in Asia-pacific region.[1] As a result technologies and innovations in retailing industry is of great significance for the textile-clothing stakeholders. The aim of this article is to illustrate the current and future retail technologies for diverse business functions of the retail industry. Also, readers will get an overview on business implications including strategic advantages and challenges associated with the adoption ofretail technologies.From the last decade, with the variety of marketing channels and competitive retailing, consumers are adopting the click-and-mortar retailing approach rather than brick-and-mortar. Rapid advancement of technology including the advent of Internet of things (IoT), proliferation of smartphones, incorporation of mobile-commerce, and growth of social media has changed the retail landscape revolutionarily, resulting in an increase of online retailing. Moreover, lower prices and time saving are the key factors of retailing technology’s success. Consequently, consumers are getting habituated to this genre of innovation. Consumers are the king of retails industry. So, it is important to cover consumer implications of retail technologies as well. The first part of this article describes the usage, challenges and potential contribution of Radio-frequency identification (RFID) in retailing industry at micro-level.

Radio-frequency identification (RFID)

Being introduced with retailing technology at first place through radio-frequency identification (RFID) was enough to confuse a reader. RFID usage is increasing in micro-level inventory tracking as the replacement of laborious and error-prone manual inventory management. In case of big supply chain, many companies are taking RFID as an integral part of their manufacturing and supply chain logistics. Amazon, one of the major retailers around the world, is looking to RFID as a solution for omnichannel retail challenges. Amazon Go is the initiative to remove cashiers and check -out lines by implementing RFID-enabled inventory management system. Sports is becoming a popular place to launch this technology for several benefits including performance tracking of athletes, race timing, and injury reduction. National football league (NFL) is using Zebra’s RFID technology to improve the television experiences for fans. At personal level, RFID tags could be used to track belongings such as cell phones, laptops, tablets, and other peripherals.

rfid-market-infographics-1

Infographic-1

The infographics-1 clearly shows the rising market of RFID technology in retailing industry that reached whopping $18 billion in 2018. Due to the benefit rendered both to the manufacturers and the retailers the popularity of RFID is increasing in different consumer markets.

 

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Infographics-2

In infographics-2 depicts that 40% and 47% items have RFID tags in manufacturer end and retailer end respectively. Manufacturers that implemented RFID technology has reported benefits in different areas especially 80% improvement in shipping and packing accuracy and real-time track-ability. It considerably reduced inspection costs and cases of claims and returns. In the retailing industry the RFID technology resulted in 95% inventory accuracy. Improvement in inventory labor productivity, reduction in cycle count time and cutting out-of-stocks at retails are the major benefits experienced by most of the retailers using RFID technology. Due to its multifaceted benefits according to the same data 48.2% of new manufacturers and 57% retailers are currently implementing RFID.

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Infographics-3

Infographics-3 shows a flow diagram about how the RFID technology actually works. The process includes RFID tags that are attached with every product incorporated with necessary information. Scanners and RFID readers are used to decode and scan the tags to reveal and record the information in different points of supply chain to track and control the manufacturing and business process. IT infrastructure equipped with computers and RFID software are used to integrate and maintain the smooth flow of information to the different stakeholders. Software are used to in-corporate the RFID information with the company ERP systems and Supply Chain Management systems so that it results in a complete and secured data management system.

Challenges:

Several challenges were found in the contemporary usage including technological limitations as well business limitations. Two types of RFID tags are available in market based on signal tracking. First, RFID tag without battery such as UPC sticker only works in the presence of radio frequency scanning or RFID guns. Second, RFID tag with the small battery could track the moving objects and send frequent signals, more convenient in the real world. Still, the second type of RFID is much costlier than the first one. For small businesses, the implementation and maintenance of RFID in full-store level are quite expensive. RFID lacks effectiveness in the presence of metal (e.g., steel) and liquids (e.g., water, cosmetics). Privacy concern could be an issue among users in case of unauthorized use of demographic information. Consumers must be convinced to adopt the technology in order to get the full-scale benefits.

Consumer Implication:

RFID can be used successfully in omni-channel retailing to deliver consumers the right products in right time. The full-scale integration of RFID would provide businesses huge amount consumer data such as the product shopping frequency, reordering frequency, and usage locations. The proper business analytics could give brand managers meaningful insights about inventory planning and marketing. To reduce product stock-out and give consumers seamless experiences, businesses should integrate RFID technology in their supply chain. Furthermore, RFID embedded manufacturing line gives information about the whole supply chain including raw material collection, work in progress, and final product delivery. Apparel suppliers could integrate RFID technology into manufacturing stage to make error-free and faster product line, increase labor productivity, and track overall production status that also can help stakeholders. RFID technology enables consumers to get real-time product data in a chain shop, which helps them to take faster buying decisions. Consumers can get personalized information regarding a product by scanning the logo on their smartphone. Consumers can utilize the promotions such as coupons and deals in case of location-based promotional offers.Still, the retail industry is in its embryonic stage of mass RFID adoption, will surely extend usage in the coming years.

[1] 2015-16 Outlook of Retail and Consumer Products Sectors in Asia