Across The Pond: How European Retailers and US Retailers Adopt RFID Solutions

Retail has once again entered into a period of transition as the COVID-19 pandemic has substantially changed the game. In addition to the challenges COVID-19 has brought into the retail industry, it has also given retailers the unique opportunity to reimagine their store strategy and operations. Retailers have experienced a wave of changes over the past 12 plus months, with store closures, end-to-end advancements of their supply chains, and changes in integrated omnichannel processes.

Together, these changes have brought a familiar technology back to the forefront for many retailers, Radio Frequency Identification (RFID). The role of RFID technology in the return of retail is integral and plays an essential role in the safe return of customers to stores as lockdown restrictions continue to ease. It directly aligns with today’s need for  omnichannel, data-driven,and customer-centered shopping experiences.

The Global Rise of RFID

The COVID-19 pandemic, as a problem with global scale, has impacted countries with varying degrees of lockdown and social restrictions. In the UK, physical retail stores were essentially closed for the best part of 12 months, while US retail and non-essential shops remained open for more extended periods and states enacted different approaches to the pandemic.

In Europe, although being introduced to the retail sector 20 years ago, RFID technology has been rolled out on a much wider scale over the past 10 years because of the benefits it brings to an omnichannel experience. Over the last few years, major European retailers, such as Adidas, Decathlon, John Lewis, Tesco, River Island, and M&S, have introduced RFID into their organizations, reporting an increase in sales of up to 5.5% and a decrease in stock holding of up to 13%. RFID as a whole is progressing at a more mature level within Europe when compared to the rest of the western world. The region has been implementing RFID technology into day-to-day retail operations for a much more sustained period than the US retail sector, which has been slower to react to opportunities to improve its inventory accuracy with the technology.

Growing RFID Implementation

RFID technology, creating efficiency throughout a global supply chain, enables retailers to know what they have and where it is in their enterprise.  Item-level RFID  improves efficiency by reducing the time employees spend taking inventory and it delivers a substantially higher accuracy than barcode scanning by consistently achieving up to 98% accuracy at the item level. Through this efficiency in stock counting, RFID allows employees to focus on creating an engaging experience for customers, rather than completing manual stock counts and laboring to improve inventory management.

RFID technology has been deployed worldwide in various applications, from the United States to European markets including Germany, France, and the UK. During the initial introduction of RFID technology in the United States in the early 2000s, there were a number of hesitations associated with the implementation of this technology as a consistent and repeatable business case was being identified. For example, the United States Government Accountability Office addressed the use of RFID technology in a May 2005 report, identifying a number of security issues. However, after the retail industry recognized the value of RFID in relation to SKU complexity in apparel, adoption of item-level RFID technology within the retail sector dramatically increased, not just in the US but across Europe as well. RFID is now a vital element of the retail end-to-end supply chain and year-over-year growth in this area is at an all time high as retailers continue to grow in recognizing the need for real-time inventory accuracy in order to operate effective omnichannel operations. 

What’s next for RFID?

The consumer is driving innovation in retail at an expanded rate as customer satisfaction and experiential shopping are setting the priorities in brick and mortar retail.  Customer demands for a personalized experience that is elevated by technology continue to evolve, and through the use of RFID technology, retailers are better positioned to offer this type of  service now. With the growth of multi-channel communication and the increasing demands of customers, RFID technology brings multiple opportunities in areas such as smart changing rooms and connected packaging. The subsequent information that an enterprise can learn from using RFID technology helps them understand customers’ habits and identify how they can tailor their approach to grow sales.

As a result of the past year and the changing retail landscape, we can anticipate that more US retailers will begin to roll out their RFID technology implementation programs within their physical stores and end-to-end supply chains. In today’s retail environment, RFID’s applications have never been more critical, as the foundation of operational success is contingent on maintaining an accurate view of  inventory at the item level.  With lower costs and a plethora of additional beneficial features, including BOPIS applications, the technology is more accessible now than ever before. RFID technology continues to see widespread adoption within the European market as expansion continues in stores, retail supply chains, and global shipping.   RFID technology in the US should also continue to grow at an increased rate as omnichannel shopping and changing consumer patterns are quickly bringing its perceived value in alignment with the value the rest of the western world has placed on the technology.