Retailers, for quite a long time, are investing in new technologies to not only scale their operation and profitability but also for better customer experience. It has been a success story for most part but there have been some failures too.
In 2013-2014, Walmart reported a loss of 3 billions of US dollars on account of product visibility issues, out-of-stock scenarios in their warehouses and retail stores respectively (Forbes).
To give it a little more context, Walmart has been trying to use newer technologies to manage, scale and profit from its long range of stores across USA and other countries. It was an early adopter of RFID (Radio Frequency Identification) back in 2003, mandating suppliers to use RFID tags on boxes but had to revoke the mandate for not sharing back the data on RFID results to suppliers.
In 2018, Walmart acquired Indian e-commerce giant Flipkart (77% stakes) for USD 16 Billions to enter Indian market but still hasn’t set up a physical store here yet.
The EAS and RFID story.
EAS (Electronic Article Surveillance) and RFID (Radio Frequency Identification) are now the most used technology in this regard. Most retailers only use EAS tags to prevent shoplifting which is a big problem in retail store. A 100 billion USD problem actually (Forbes, 2022). You might have seen EAS tags on clothing items, shoes and accessories in a retail store. This need to be deactivated by a staff member before you can leave the store or an alarm goes off at the exit gate where EAS antennas are deployed. This is how retailers prevent shoplifting.
However, EAS is not the only thing Retailers would need to survive in 2023. The market is changing rapidly and retailer must learn from Walmart.
Walmart, after 20 years when it first adopted the RFID technology, is now looking back at it again and there are various reasons for that.
RFID technology itself has matured in past 20 years and the implementation costs have come down significantly. Passive UHF RFID tags, which are mostly used on articles, now cost about 5 cents, from 50 cents earlier.
Imagine implementing RFID tags that cost 50 cents on a large scale where you have to tag millions of articles. That would surely make a dent on the business model and profitability but that is not the case now.
What are the Advantages of RFID over EAS?
In simple terms, RFID is an AIDC technology, meaning it is capable of identification and data capture, remotely, using radio frequency signals. It can be used for tracking, tracing and identifying articles in a retail store and inventory.
You can just figure out the contents of a shopping cart without having to go through each item, imagine how much time that will save, scan contents of boxes stocked on pallets, without having to open them manually, from a distance, which will felicitate fast and precise inventory control and management.
EAS on the other hand only helps you with security and preventing theft. It uses electromagnetic waves to sound an alarm when a tagged item passes through an EAS (antenna) gate, typically installed at entry and exit points of a retail store. Sometimes retail stores also install these outside restrooms as well to deter shoppers from taking unbilled items into restrooms.
Why use RFID and EAS in combination for better profitability:
Now that you know about RFID and EAS, it’s a fair conclusion that RFID can be used with EAS to not only prevent shoplifting that will save huge losses but to also prevent losses from ‘item is out-of-stock’ scenarios that retail stores often suffer from. RFID can be used for better inventory management as it provides high degree of precision over barcodes and high, long range read rate as well. Since it can scan RFID tagged item from a distance, with a clear line of sight, you don’t actually have to climb stocked pallets or use ladders preventing any falling accident and potential losses.
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