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NRF 2023: RFID Pushes Retailers Toward Digital Transformation

At this year’s expo, retailers shared the innovative ways radio frequency identification technology is helping transform their businesses, from loss prevention to supply chain management.

Lily Lopate

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Lily is a Senior Editor at BizTech Magazine. She follows tech trends, thought leadership and data analytics.

A growing problem for retailers is managing inventory in omni-channel environments. Retailers want to ensure consistency across the in-store, online and social media experiences, but supply chain and staffing shortages can make this complicated. These days, the industry is benefiting from radio frequency identification technology to help retailers monitor inventory in real time. RFID’s sophisticated artificial intelligence and sensory technology can geotag and track products as they move from the warehouse to the store.

At NRF 2023: Retail’s Big Show, IT leaders shared how they’re using passive RFID systems to enhance loss prevention efforts, identify counterfeit resale products and record accurate inventory. By digitizing the lifecycle of any product, retailers can take a major step toward digital transformation and gain better visibility into their supply chains.

Why RFID Is Key to Unlocking Data Insights

“We need to recognize that in retail now, data is currency,” said Ray Marciano, retail growth and commerce lead at Accenture, in a session on how RFID is driving digital transformation. Retailers are on the cusp of leveraging that insight further.

For Takahiro Tambara, CIO of Fast Retailing, RFID lets us “collect rich layers of data at our fingertips. And from a marketing standpoint, we can offer more customization.”

That's one of the many reasons retailers are embracing passive RFID systems to drive business transformation, unlock data insights and inspire a more customer-oriented culture.

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How Retailers Are Using RFID to Accelerate Digital Transformation

RFID’s microchip architecture makes it ideal for numerous applications. Here are the core ways RFID is helping retailers achieve their digital transformation goals:

Automatic and Accurate Inventory Updates

RFID gives retailers a 360-degree view of product inventory in real time. “With omnichannel retail, it’s much harder to accurately track our inventory,” Marciano said.

Experts on the panel shared several examples, including one in which a store manager might have an inaccurate count of a product for a store branch because he couldn’t see the tally of online orders. Bill Toney, vice president of global RFID market development at Avery Dennison, agreed: “It’s impossible to keep a human count of inventory because it constantly changes, but RFID helps us get to 98 percent real-time accuracy.”

DIVE DEEPER: Find out how IT leaders are using predictive analytics in retail.

Better Visibility into the Supply Chain

Experts also agreed that this retail technology directly supports the supply chain, which is one of the most disruptive parts of the industry right now. “It is hard to imagine a world where retail tech is not increasing visibility into the supply chain,” said Tambara. With added transparency, retailers can see where products are and problem-solve proactively.

After investing in RFID, Tambara explained how the “technology made the customer experience faster and more reliable.” Toney noted that RFID can boost ROI by 8.3 percent, according to a recently published Accenture white paper.

As a retailer, we look at technology as a solution to our problems. RFID is one of those solutions. It’s a game changer."

Ray Marciano Retail Growth and Commerce Lead, Accenture

Improved Loss Prevention

One of the most common uses of RFID tags for retailers is minimizing loss. “RFID is essentially helping us digitize clothing. This is huge because it means people can move in space as fast as they do online. And retailers have a trace history,” Tambara said. At Avery Dennison, the experience has been more like a built-in security system. Bill Toney described how RFID technology keeps an eye on inventory and protects against theft.

In a related session, David Shoop, senior vice president of technology, stores, corporate services, pro and services at Lowe’s Home Improvement, shared how RFID helped his company upgrade from a legacy system. Much of Lowe’s merchandise has RFID sensors embedded in the products themselves.

“If someone comes into a store and steals a power tool off the shelf, the store can deactivate the tool remotely,” Shoop said. “Customers can also turn off a product remotely if, say, they loaned a neighbor a tool and never got it back.”

LEARN: Find out what the hottest retail tech trends are for 2023.

Frictionless Checkout

Another pain point that RFID solves is the checkout process. Thanks to RFID tags, shoppers can grab the items they need from the store and walk out without waiting in line. The sensors automatically calibrate the weight and cost, then charge a customer’s credit card.

“This can dramatically improve sales because it increases movement in the store. If the experience feels seamless, the customer will make it a positive part of their daily or weekly routine,” Tambara said.

WATCH: Discover a related NRF sessions about RFID powering digital transformation.

Identifying Counterfeit or Resale Items

RFID is also helping retailers detect counterfeit or resale items. Antoine Tessier, CTO of LVMH Moët Hennessy Louis Vuitton Americas, said his company sees a lot of people try to “rob, run and resell our luxury items.” RFID product information is helping LVMH substantiate the high value of its wares. “A quick scan will reveal the worth, origin, fabric, material and carat count so you can immediately tell if a bag is authentic or counterfeit,” Tessier said.

DISCOVER: Explore the retail solutions business leaders are investing in.

It’s impossible to keep a human count of inventory because it constantly changes, but RFID helps us get to 98 percent real-time accuracy."

Bill Toney VP of Global RFID Market Development, Avery Dennison

Why RFID Is Crucial to the Modern Store Experience

Beyond the technical aspects of RFID, retailers are also discovering how it enhances the modern store experience. It improves customer and employee satisfaction. Plus, it adds transparency, making it easier to communicate a brand message with clarity.

RFID offers added product transparency. “Customers today are smart and want information on what they purchase,” said Tambara. RFID lets retailers put that intel into the store experience. For example, Marciano added, sustainability is a top concern for the next generation of consumers. “RFID unlocks the initial source of a product and identifies where it originally came from, whether that be a farm, factory or local manufacturer,” he said.
RFID offers richer consumer data and insights. With RFID consumer data, retailers can better analyze buying behavior. "RFID is a one-to-many sensor, so we can collect all this metadata on consumers as they shop, scan the associated 2D barcode and purchase. It helps us target them better for the future,“ said Toney.
RFID offers a smoother experience. “We see RFID technology dramatically improving customer and employee satisfaction. This in turn means better retention and brand loyalty,” said Toney. Since employees can locate items, get live notifications and update product status quickly, operations are smoother.

RFID is an essential tool to compete in modern retail. It’s also an effective way for retailers to achieve digital transformation. “As a retailer, we look at technology as a solution to our problems. RFID is one of those solutions. It’s a game changer,” Marciano said.

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