According to Chain Store Age‘s latest Store Experience Study, the top five technology priorities for retailers in 2024 are personalizing customer experiences, upgrading CRM/loyalty programs, empowering store associates, inventory visibility, and refreshing the point-of-sale infrastructure.
Note the top priorities for retail industry leaders (those growing 15 percent or more the previous year), which include empowering store associates, optimizing customer journeys, personalizing the customer experience, and inventory visibility. The top three emerging technologies of 2024 are voice/walkie-talkie in stores and parking lots, 5G tech at the store level, and RFID.
The NRF Big Show in New York earlier this year confirmed that we are all well past the discussion of RFID as an emerging technology. On one of the show’s industry panels, Joe Coll, Macy’s vice president of asset protection operations and strategy, called it a ‘game changer,’ while on another, Dr. Bill Hardgrave, who founded the RFID lab at the University of Memphis where he is now president, called it ‘table stakes.’
Is RFID a game changer, table stakes, or perhaps a mix of both today? This article aims to update you on the latest data on the retail industry’s adoption of RFID and the impact the technology has on retailer profitability.
The State of Retail RFID
The estimated global market size for RFID will be $23.8 billion by 2030. Sixty-one percent of retailers plan to implement RFID in their stores by 2026.
RFID technology empowers retailers to create a serialized data archive of products in-store, online, and at every step of the supply chain. RFID assigns unique identification codes to each item, streamlining inventory tracking and enhancing accuracy. This allows retailers to efficiently manage stock levels, reduce errors, and gain visibility into their supply chain.
For multiple retailers, RFID has now become a crime-fighting tool through solutions such as smart exits. The serialization of each individual product allows detailed visibility into what is leaving the store and forensic comparison to what was paid for. Video images can be integrated into exception reporting to highlight potential theft events and expedite investigations.
In my Future of Retail presentation, I stress the importance of digitally empowered associates. The smartphone—the third megatrend that has evolved retail forward—has dramatically enhanced consumer shopping power. Today, 77 percent of associates—up from 67 percent in 2022—feel shoppers are better connected to information than they are.
The latest Zebra Shopper Study provides clues on how to maximize and improve associate time engagement with consumers inside physical stores.
Note again the importance of technology in providing real-time inventory visibility and RFID, specifically in providing detailed information for effective consumer engagement.
The Profitability in Retail RFID
According to the IHL Group, in 2023, companies using RFID in their retail operations averaged profit growth that was 57 percent higher than that of those not using it. In 2024, the same companies are expecting profitability to be 88 percent higher than that of those not already using RFID.
Retail winners (2023 sales growth >10 percent) are 32 times more likely to be using RFID technology than below-average retailers and 20.5 times more likely to plan to deploy RFID within the next twelve months.
Similarly, the 2023 profit winners are 19 times more likely to be up-to-date on the deployment of RFID technology than below-average retailers and are deploying RFID technology at a rate 4.2 times higher within twelve months than below-average retailers. The same trend holds for the 2024 expected sales and profit winners.
RFID: Table Stakes or Game Changer?
In today’s fast-moving retail environment, where consumers have the power to instantly buy from your competitor, even while standing in your store, RFID is both table stakes and a game changer. As Bill Hardgrave said at NRF’s Big Show, “If you do not have RFID and you do not have serialized data on your products, you cannot compete.”
It is table stakes because consumers are increasingly demanding accurate inventory management, improved product availability, and more efficient, engaging shopping experiences. RFID is a game-changing technology because it provides real-time visibility into inventory, streamlines operations, enhances customer experiences, and reduces shrink.
Ultimately, RFID is a technology tool that generates substantial, valuable information. The value is in using the data to improve operations and craft exceptional consumer experiences.
RFID technology is an enabler and not an automatic panacea that solves all problems. It can very effectively address the technology priorities outlined in the opening of this article. Properly implemented, it has the potential to revolutionize retail operations and optimize the profitability of the retail industry.