How does RFID work in retail?

How RFID works in retail

The search for innovative resources aimed at improving customer service and simplifying business management in the retail sector is extensive and constantly evolving. Over time, companies have used various tools for this purpose. However, currently, RFID technology stands out as a highly promising option which offers a series of advantages for both retail companies and their customers.

Almost two decades ago, in 2003, when RFID technology began to prove its effectiveness, only a few could afford to invest in something that, at that time, was considered innovative and revolutionary. However, with the passage of time, this technology and RFID tags have become more accessible thanks to growing demand, which has facilitated its adoption by an increasing number of retailers.

In the United States, approximately the 90% of retail companies have incorporated this technology into their operations. In Europe, there is constant growth in the number of retailers that adopt it with the aim of improving the customer experience.

The return on investment for companies that have implemented this technology is 6.8%, and in the case of those that have adopted RFID in a more comprehensive way, the percentage reaches 9.2%. This phenomenon has led to estimates that suggest that in the future, RFID technology could displace the traditional barcode.

How does RFID technology work?

The information it contains is transmitted through a reader that establishes communication through an antenna with a tag that does not require its own power supply and obtains its energy from the signal it receives. This signal allows you to scan all the products contained in a box without having to open it, since it has the capacity to simultaneously identify up to 800 items per second in optimal conditions.

The reading range varies from 1 to 10 meters and exceeds barcode speed by up to 8 times. The information captured by the reader is sent to a database, where it can be managed and analyzed.

Why is RFID technology necessary in the Retail sector?

The RFID technology It brings numerous advantages to the retail sector, improving operational efficiency, increasing sales and preventing shortages, something of utmost importance for companies. If you have not yet been convinced of its importance, below we list some of the additional advantages that this technology offers:

  • Greater precision in inventory management: This is due to its ability to more effectively track and manage the movement of products, making it the most well-known and widely used application by businesses.
  • Location in real time: With RFID technology, companies can identify in real time and continuously the exact location of products or assets through a system known as RTLS (Real Time Location System).
  • Reduction in inventory audit time: The ability of this technology to track and control merchandise at various points, such as logistics operators, alternative warehouses, own warehouses and the distribution chain, considerably facilitates the inventory audit process.
  • Improves decision making: Thanks to the availability of real-time data, companies can generate reports that facilitate deeper analysis of Big Data, which in turn supports informed decision making.
  • Marketing boost: The implementation of this technology contributes to improving financial results with less effort, which is essential to make the most of the time available. Additionally, it is particularly useful for retailers with limited staffing.

How is the technology applied RFID in Retail?

Although there are currently multiple applications of RFID technology in the retail sector, below we will highlight five of the most common:

  • Improved product visibility: This allows you to effectively integrate the diverse ecosystem of both physical and digital experiences, including distribution centers and contractor factories.
  • Warehouse and inventory management: This is the most widespread application, with approximately 50% of retail companies implementing it as their main focus. RFID technology is used to improve efficiency and manageability throughout the supply chain. Each item is uniquely coded, reducing administration costs and improving operational times.
  • RFID at points of sale: Used to speed up the payment process, reduce queues and increase sales. Customers can check-in and pay for all the products in their basket or cart without having to take them out and scan them one by one. Additionally, inventory is automatically updated at checkout.
  • In-store inventory visibility: This application focuses on reducing the number of products in stock in the store and optimizing the visibility of products for customers. It is complemented by real-time replenishment systems that alert when it is necessary to replenish products.
  • Improving the customer experience in the store: RFID technology is used to implement loyalty systems, smart fitting rooms and demonstrators that act as information points. This helps facilitate the customer experience and strengthen the brand image in the store.

Future RFID trends in retail

RFID implementation in the retail sector is constantly evolving. Some key future trends include:

  • Improved supply chain management: RFID is being used more widely in supply chain management. This allows real-time tracking of products from the manufacturer to the point of sale, optimizing logistics and reducing costs.
  • Product customization: RFID allows personalization in real time. For example, stores can tailor specific promotions and discounts to customer preferences, improving the shopping experience and increasing loyalty.
  • Contactless purchase: RFID technology is being used to create contactless shopping experiences, which has gained relevance in the pandemic era. Customers can purchase products without needing to interact with cashiers or touch the products.

Impact of RFID technology on the supply chain

The use of RFID in the supply chain has revolutionized the way products are managed, with notable benefits:

  • Logistics optimization: RFID enables accurate, real-time tracking of products in transit, improving efficiency in warehouse management and distribution routes. This reduces shipping errors, storage time and waste.
  • Reduction of waste and losses: Improved inventory visibility thanks to RFID helps prevent product obsolescence and minimizes losses due to theft or spoilage. This has a positive impact on sustainability by reducing product and packaging waste.
  • Improved traceability: RFID allows detailed tracking of the supply chain, which is essential to ensure the quality and safety of products. In the event of a product recall, the affected lots can be quickly identified.

Environmental aspects and sustainability of RFID in Retail

The use of RFID in retail also has important implications in terms of sustainability and environmental practices:

  • Reduction of waste and waste: More efficient inventory and supply chain management through RFID decreases waste of perishable products and reduces the need to replace obsolete products. This has a direct impact on reducing waste and reducing the carbon footprint.
  • Efficient use of resources: Optimizing the supply chain with RFID can lead to more efficient use of resources such as transportation and storage. This decreases the need for fuel and reduces the emission of greenhouse gases.
  • Greater sustainability in production: By allowing more precise tracking of products and their origin, RFID can encourage more sustainable and ethical production practices, such as traceability of organic ingredients or compliance with fair trade standards.

These aspects demonstrate how RFID not only improves efficiency in retail, but also has a positive impact in terms of sustainability and responsible resource management.

If you are a retailer, seriously consider implementing RFID into your operation to stay ahead in a highly competitive market.

For more information on how to make the most of RFID in your business, or if you would like personalized advice on its implementation, do not hesitate to contact contact with us. We're here to help you make the most of this technology and boost your success in retail!

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