In this article, learn about:
- Why RFID matters and how to plan with suppliers for maximum value.
- How to set up RFID hardware and integrate with POS systems.
- How to pilot, scale, and train staff for successful adoption.
As a necessary tool for growth, agility, and precision, RFID is a widely adopted technology in the retail sector, with 93% of retailers embracing it.
However, if you're one of the 7% of retailers not currently implementing RFID, it can feel overwhelming to get started. We've broken down clear steps for retailers new to RFID implementation, so you can confidently begin tracking essential items with real-time visibility.
Phase 1: RFID Strategic Planning with Partners and Stakeholders
Step 1: Defining Value and Use Cases
One primary blocker retailers have with RFID adoption is providing a measurable value to the investment. Simply put, RFID technology enables smarter pricing, faster adjustments to assortment planning, and healthier product margins.
While inventory visibility is the primary use case for retailers using RFID, teams should prepare to discuss other resilience-driving benefits like supply chain visibility, omnichannel fulfillment, and stockout reductions.
Related Reading: Retailer Preparedness with 2D Barcodes and RFID Optimization
Step 2: Supplier Trust and Collaboration
Shared visibility is a key part of trading partner trust and collaboration. It’s essential to work with suppliers to ensure a smooth transition and a shared understanding of the importance of RFID implementation. Bringing in key suppliers in a small subset of products is a good way to test implementation and prove a higher Return On Investment (ROI). Involving suppliers early is key, as many retailers who rely on source tagging (where suppliers apply RFID tags during manufacturing) see a 16% increase in ROI.
Step 3: Data Standards Alignment
Once key suppliers have been brought into the conversation and planning stages, retailers should collaborate on creating documentation and tagging requirements to establish a single source of truth.
While many retailers have their requirements listed publicly for comparison, the minimum requirement for RFID data standards should be a GS1 Company Prefix and a Global Trade Item Number (GTIN). This information is used in the Electronic Product Code encoded in all RFID tags.
Related Reading: What is RFID at Walmart?
Phase 2: RFID Infrastructure: Getting the Right Hardware and Software
While RFID tags can be both active and passive, the typical choice for retailers is passive ultra-high frequency RFID tags, which are low cost, don’t require batteries, and have some of the longest read ranges.
A complete RFID setup requires the following:
- RFID tags
- RFID readers
- Antennas
- Management Software
Step 4: Hardware Setup and Placement
Once RFID tags have been procured (and encoded with the correct data), it's time to look at installing the reader system. We recommend purchasing fixed and handheld readers. Fixed readers are often mounted in stationary locations, such as loading docks or staging areas, while handheld readers offer mobility for use on the go. Passive reader systems can cost between $ 1,000 and $ 3,000 per reader.
Antennas are needed to convert the signals from the reader into radio waves, which power the tags for item tracking. When they're placed strategically throughout your retail business, they allow maximum read ranges for inventory tracking.
Step 5: RFID Software Setup for Retailers
Once the hardware has been set up, it’s essential to examine the software. The hardware collects raw data, but without the software, the data is noisy and unusable. RFID readers come with software that needs to be installed, which connects to your existing retail management systems, such as Enterprise Resource Planning (ERP) or Warehouse Management Systems (WMS).
POS systems and inventory databases should be updated to handle and store the Application Identifier and GTIN format. This vital step ensures that every RFID tag read has the opportunity to recover costs, prevent waste, and build trust for suppliers and customers. Additional data, like batch/lot numbers, can be encoded, which can align with 2D barcode implementation.
Phase 3: Execution and Scaling RFID Tagging for Retailers
Once RFID systems have been implemented, it's time to focus on an operational rollout to ensure RFID data can be folded into daily retail functions.
Step 6: Pilot Testing and Refining
To avoid unnecessary impacts, we recommend retailers adopt RFID with a limited pilot scope. Select a single product line or category (like apparel, which already has widespread adoption industry-wide) to test an entire end-to-end system.
Pilot testing enables retailers to observe tag functions in real-world environments. Materials like metal and liquids can interfere with tag signals, and different use cases can highlight needs for more specialized tags.
Step 7: Integrating RFID Insight and Automations
Once the pilot program is running successfully, retailers have the opportunity to scale the technology fully across their operations for insight.
The data can be used in the following ways:
- Inventory Automation: RFID allows for real-time data and automation. An RFID system can automatically alert teams when shipments arrive, as well as reorder products when inventory is low. It reduces manual work for warehousing teams, lowers labor costs, and prevents stockouts, allowing for faster and more accurate replenishment.
- Omnichannel Fulfillment: With some retailers reporting up to 98% improved accuracy for omnichannel fulfillment, RFID prevents the most common errors for Buy Online Pick-up In Store (BOPIS): when a system sells items that aren't actually in stock.
- Loss Prevention: Item-level tracking with RFID is powerful to detect shrinkage, track stolen items, and support anti-counterfeit efforts.
Step 8: Employee Training and Change Management
As with 2D barcodes, any large-scale process changes in the retail world require buy-in and education for store employees. Train staff on the larger-scale purpose of RFID, as well as how to use mobile RFID scanners for cycle counts and stock-picking assistance. RFID enables POS systems to trigger warnings for recalled items and automate markdowns based on expiration dates. The more buy-in from store associates, the greater the efficiency in the long run.
In Closing: RFID for Retailer Flexibility and Readiness
In the ever-changing retail landscape, adopting new technologies like RFID can seem daunting. But teams who view implementation as an agility strategy rather than a compliance exercise will move forward with visibility, precision, and trust with business partners, suppliers, and customers. The more your systems support this, the more resilient your retail network becomes.
