In part one of this series, we explored the humble beginnings of department stores, supermarkets, and the first use of a bar code in a physical store. In part two, we expanded our innovation journey to e-commerce, smartphones, and robots. In part three, we shifted to loss prevention technologies, some of which have become powerful workhorses in store operations: cash registers, CCTV cameras, and electronic article surveillance (EAS).
Here, we provide some definite answers on the start and adoption rates of RFID, we seek more contactless answers with self-checkout, and we travel to the internet and discover more things.
First Use of RFID
The consensus is that the roots of radio frequency identification can be traced back to World War 2. The Germans, Japanese, Americans and British were all using radar—which had been discovered in 1935 by Scottish physicist Sir Robert Alexander Watson-Watt—to warn of approaching planes while they were still miles away. The challenge was identifying the planes and whether they were friends or foe.
The Germans discovered that if pilots rolled their planes as they returned to base, it would change the radio signal reflected back. This crude method alerted the radar crew on the ground that these were German planes and not Allied aircraft (this is, essentially, the first passive RFID system).
In a secret project, Watson-Watt developed for the British the first active identity friend or foe (IFF) system. They put a transmitter on each British plane. When it received signals from radar stations on the ground, it began broadcasting a signal back that identified the aircraft as friendly. RFID works on this same basic concept. A signal is sent to a transponder, which wakes up and either reflects back a signal (passive system) or broadcasts a signal (active system).
The first RFID patent was filed in 1973 by Mario W. Cardulla, who invented an active RFID tag with memory that was rewritable. In the same year, Charles Walton received a patent for a passive RFID tag for a door locking system which became what we know today as a key card system.
As this series mostly focuses on the evolution of disruptive technologies in retail, fast forward nearly 80 years since the end of World War II, and RFID is now becoming ubiquitous to the industry. A 2021 study published by Accenture labeled RFID adoption in retail as booming.
As the study pointed out, RFID adoption has increased dramatically with Europe seeing a 10x increase. The impetus of the growth in retail was apparel, but other sectors will substantially add to the number of items that will be RFID tagged.
Best use case for retail, especially during the pandemic, was inventory visibility. Inventory distortion (out-of-stocks and over-stocks) is a $1.8 trillion problem, or 10.3 percent of same store sales in retail and hospitality globally. Accurate inventory as a core strategy for future success was cemented by the pandemic.
First Self-Checkout
David R. Humble got the idea of a self-service technology as he stood in a long grocery checkout line in South Florida in 1984. The customer in front of him was so frustrated by the clerk’s slowness that he grabbed his own items and started scanning. “Why can’t anyone check himself out of a store,” Dave thought as he returned to his job as vice president of product development for Sensormatic Electronics Corp. After convincing senior management that the idea was sound and tinkering with a number of prototypes, CheckRobot Inc. was formed as a Sensormatic subsidiary with Humble as president.
Creating a working self-service technology took three years and five million dollars. The first self-checkout machines, then called automated checkout machines or ACM, were set up in a Kroger store in Atlanta in July 1986. One of the hottest innovations in retail had been born.
The market for self-checkout solutions is expected to CAGR 13.3 percent from 2020 to 2027. Today nearly 75 percent of consumers have used self-checkout, primarily in grocery.
The pandemic accelerated the adoption of contactless solutions that avoided humans. Walmart announced plans to go fully self-checkout. Winning retailers (those growing 10 percent or more in last year) are increasing investments in self-checkout at 178 percent over the next two years. Check out part three on where Amazon is taking self-checkout next.
First Use of the Internet and Those Growing Things
The idea of a global internet has been around for some time. Nikola Tesla contemplated a world wireless system in the early 1900s, and visionary thinkers like Paul Otlet and Vannevar Bush conceived of mechanized, searchable storage systems of books and media in the 1930s and 1940s.
The first workable protype of the internet arrived in the late 1960s with the creation of the Advanced Research Projects Agency Network (ARPANET) which was originally funded by the US Department of Defense. ARPANET delivered its first message via node-to-node communication on October 29, 1969. The simple message was LOGIN, but it crashed the network and only the first two letters arrived.
Fast forward to today and we are now talking about the Internet of Things (IoT). Predictions are that by 2026, more than 64 billion IoT devices will be connected around the world. Additionally, companies and consumers will spend nearly $15 trillion on IoT devices, solutions, and supporting systems from 2018 through 2026.
Retail will benefit from the expansion of the Internet of Things. A connected store will be more profitable.
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