It’s no secret that the most successful retailers have the best knowledge of their products, their supply chain, and their customers.  The faster and more consistently a chain can process and respond to changes in these areas, the more competitive they are likely to be.  Conventional inventory management relies on line-of-sight tracking; an employee must visually identify a product in order to account for it.  It is both costly and time-consuming to have employees routinely do this, so this is where RFID technology can provide a solution.

RFID or radio frequency identification works by using radio waves to transmit information between a small label and a reader.  The technology is applied through a variety of mediums, including , passports, loyalty cards, and even the for buses running by Gap’s office in San Diego.  In retail, putting RFID tags on products and packaging can have huge benefits for the manufacturer down to the end-user.

RFID tags can store information and can be read from up to a several feet away, without line-of-sight, so they are especially helpful for inventory management and security.  Manufacturers who put RFID tags on their products can add information about individual items, such as when it was made, how, and by whom.  Pallets of goods can be equipped with RFID tags to improve shipping accuracy and cut costs.  Once a product reaches a retailer’s shelf it can be accounted for faster and more effectively using the same RFID technology, reducing labor costs and inventory issues.  Retailers and manufacturers can even use RFID to track promotions more effectively.  RFID technology is already a proven solution for limiting retail -it can reduce human error in the supply chain and double as a theft deterrent.  Additionally, tags programmed with a manufacturer’s identification can assure consumers that they have purchased a genuine product.

Standard size for retail, some are even smaller

Despite all the benefits of RFID, there are plenty of security and privacy concerns.  A retailer can track a shopper throughout a store utilizing loyalty cards that the person is carrying or an RFID tag .  And who’s to say a person can’t steal your credit card information using an RFID reader a few yards away.  From a retailer’s perspective, there are risks associated with using RFID.  There have already been a few where individuals have compromised RFID-enabled inventories using their own RFID reader.  These concerns have to be addressed before retailers or customers will feel totally comfortable with implementing RFID.

For now RFID tag costs are still pretty high, ranging between 5 and 50 cents depending on order volume, so you’ll probably only see them on higher-priced products right now.  However, as usage increases and costs continue to drop, RFID technology is expected to migrate toward lower cost products.  In-house RFID printers are becoming less expensive as well, making it possible for businesses to create their own RFID solutions.  I think there’s a huge opportunity for these little tags to improve identification and tracking for businesses, who in turn can use it to enhance the shopper experience and create value for customers.  Next time you’re opening a DVD case or tearing into your new electronic goody take a peek inside the package and look for an RFID label; they’re in more places than you may realize!