INTERVIEW
RFID technology is becoming increasingly widespread - especially in
fashion retail. Integrated into labels or hang tags, RFID chips are the
digital signature of each individual product. They help retailers to build
transparent supply chains, prevent losses permanently, optimise stock
levels and simplify POS management. And, of course, they help to increase
sales. Dutch company Nedap is one of the world's leading suppliers of
RFID-based retail solutions, working with brands such as Adidas, Superdry
and Acne.We asked Tom Vieweger and Ilse Protsman from Nedap about how the
technology helps retailers.
RFID technology is making its way into the retail industry. In which
areas are RFID chips already standard?
Tom Vieweger: We see that RFID is commonly used in "fashion
environments," namely apparel, shoes, and sports. Many global
implementations show that the technology has its most significant impact on
the - so-called - vertically integrated models: brands that control their
entire product life-cycle, including production, logistics and the sale
across different channels.
Ilse Protsman: Estimations say that more than 10 billion products have
been tagged with RFID in the last year – and the forecast is that this
number will grow significantly year by year. As a consequence of a growing
number of source-tagged brands, we now also see a lot of movement of RFID
adoption from multi-brand sports retailers.
In which areas do you still see great potential?
Ilse Protsman: Parallel to the adoption in fashion, also other segments
from the 'slow moving consumer goods' industry start adopting the
technology - such as accessories, jewelry, and cosmetics.
Tom Vieweger: Especially, improvements on the label-side are fueling the
potential for additional areas. Not only do RFID labels get less expensive,
but they also show improved performance in challenging environments such as
metals and liquids.
What are the biggest concerns you encounter?
Ilse Protsman: There are not many concerns anymore. After we saw a phase
of pioneering about a decade ago, it's clear now that the technology is
working, and business cases are proven.
Tom Vieweger: These days, we get many questions from our clients about
the environmental impact of RFID labels, since they include a tiny chip and
a small antenna. At the same time, these materials are kept to a minimum so
that customers can dispose of them with regular waste. Production methods
are becoming more and more sustainable. Finally, there is a persuasive
argument on how RFID helps the brands to be more sustainable: the impact of
high stock visibility enables them to sell more with less stock, especially
since it's not necessary to hold high safety stocks anymore.
So, RFID Technology helps to reduce overstock?
Ilse Protsman: Yes, since retailers typically know that their stock
accuracy is low, they often hold high safety stocks in their stores. Those
safety stocks are utilised to ensure merchandise availability, even if the
stock information might be wrong.
However, the problem is that the safety stocks extend the actual demand
and, thus, those products must be reduced or even returned to outlets at
the end of the season to clear the space. Here, RFID shall help to avoid
such kind of waste. If stock information is accurate, and a retailer knows
where the products are, they do not need such safety stocks.
One of the biggest hurdles in opting for RFID so far has been the cost.
Has anything changed or is the benefit becoming increasingly clear?
Tom Vieweger: There is currently a massive wave of RFID adoption going
on in fashion and apparel retail. This growth is primarily based on a
business case that can be easily made: the need for accurate stock data is
critical for today's (omnichannel) retailers; while at the same time the
operating cost for deploying RFID has significantly decreased due to lower
RFID tag prices that are now around three euro cents a piece. Considering
that the price was ten euro cents only five years ago, this has made a big
difference and significantly improved the business case.
An essential benefit of using RFID is creating stock visibility along
the whole supply chain. Not only does RFID enable fast scanning, but as
each individual item can be easily tracked and traced, a brands’ supply
chain can operate on the foundation of accurate data.
This is particularly valuable in the apparel business with its short
product life-cycles, high seasonality and the given color/size
complexity.
To be able to react to shifting demands, brands and retailers need to
fully understand the flow of their products.
How can chips effectively protect against theft?
Tom Vieweger: The beauty of RFID is that it's a technology with a
multitude of functionalities. If a product is equipped with an RFID label,
you can seamlessly register every movement – also at the exit doors of a
store for security reasons. One might argue that having the security-tag
"just" in the price label might be a weaker security level. However, at the
same time, it means that 100 percent of the items in a store are secured
then. The level of security can increase when retailers choose to sew the
RFID chip into the care label.
Ilse Protsman: We see that, especially in recent times, the discussions
with our clients have changed. Nowadays, retailers try to implement new
customer services like self- or mobile checkout. In this case, RFID enables
secure mobile checkouts - either employee-assisted or on the mobile device
of the customers themselves.
Tom Vieweger: The deactivation of the RFID label takes place in a cloud
database by changing the product status from 'unsold' to 'sold.' Whenever
an item leaves the store unpaid, the RFID-based EAS antennas at the store
exit query the cloud database and will give an alarm in case an 'unsold'
product leaves the store.
Do you have examples where this works well?
Ilse Protsman: For a majority of our clients, it's some kind of a
logical "next step" to add anti-theft use cases to their RFID
implementation, as soon as all stock-relevant use cases have been
implemented. Good examples from our users are companies like Scalpers and
Celio. Both have added RFID-based article surveillance meanwhile.
Tom Vieweger: When it comes to secure mobile checkouts, we are involved
in various pilot projects. Technically there are no problems, but the
retailers are testing the acceptance by their customers of such services.
We see that, especially in Asia, mobile checkouts become a standard service
these days, and we expect to see the same development in the rest of the
world as well. The main benefit here is that people no longer have to wait
in lines at the checkout. People pay by using their phones and can easily
walk out of the store. Decathlon is a good example here in the
Netherlands.
Ilse Protsman: Another RFID use case for checkout is integrating this
technology at the cash desk. Instead of one-by-one barcode scanning, all
RFID labels are read at once, which significantly increases the speed of
checkout.
RFID chips are also needed to equip the physical store with digital
technology and to offer more service, for example in-store navigation,
digital advice in the changing rooms, etc. How far has the market come?
Ilse Protsman: I would say, these days, really all retailers are heavily
making their minds up about options to digitize their stores. With plenty
of solutions, the question is, where shall they start, and how can they get
a quick return on investment?
Tom Vieweger: What we are discussing with them when it comes to RFID, is
to get the basics right: Stock visibility is the foundation for all digital
in-store applications. As a retailer, you need to know what you have and
what you need to make merchandise available to the clients.
Ilse Protsman: "Digital touch-points" such as displays, in-store kiosks,
or smart mirrors have one thing in common – they can only drive conversion
if the promoted products are actually available. Stock information across
all systems must be accurate and consistent. Only then, conversion and a
high customer satisfaction rate is guaranteed. Here, RFID enables a high
stock accuracy.
What are the biggest mistakes in using RFID?
Ilse Protsman: Around ten years ago, we already saw a first "hype" with
some RFID projects that have been kicked off, predominantly by "technology
enthusiasts." However, those projects suffered from excessive complexity
and highly engineered processes. It turned out that it was hard to find a
business case since the scalability of customized solutions is often not
there.
Tom Vieweger: As a consequence, we set up the implementation projects
with our clients with our proven guiding principles: Keep it simple, phased
approach, and start small, scale fast. When a digital application has
proven to be successful, it is the moment to scale up to the rest of the
stores. However, as technology, consumer demand, and the market are
permanently changing, it is essential to maintain a high degree of agility,
which means, for example., to take away internal barriers – continuously –
and reiterate with new approaches.
Ilse Protsman: Finally, we put people in the center of attention. We
think using RFID solutions in stores should be fun for the staff operating
it.
What is your forecast: where will the technology be in five years?
Tom Vieweger: The RFID market is incredibly dynamic. We are convinced to
see more than 50 percent of fashion products being tagged in five years
from now. From a technical perspective, we will see that systems will be
more and more connected so that all stock movements can be tracked in
real-time in an EPCIS repository from the source of production to the
customer.
Picture: Nedap
* This article was originally published here
