The FMCG and retail businesses are often faced with myriad challenges whether it is store management, POS operations, retail inventory within the store or at warehouses, or the multiple issues with supply chain and logistics. Having an IoT and AIDC technology-led solution becomes crucial as inefficiency in such operations leads to substandard services to customers and mounting losses to business owners. Even though barcoding technology has been in use in retail for decades, going back to the 1970s, barcoding in retail provides limited benefits and fails to meet the varying challenges retailers face in 2024.
Talking about the RFID mandate by Walmart requiring suppliers to tag their goods with RFID tags, you must know that Walmart was one of the leading retailers that contributed to RFID and EPC (Electronic Product Code) development in the early 2000s, along with Gillette, P&G, Unilever, etc.
Let’s see in detail what Walmart’s RFID mandate means today how suppliers can comply with these rules and the benefits for both suppliers and Walmart.
What is Walmart’s RFID Mandate?
Walmart is a USA-based leading retail brand that has over 10000 stores operating in over 24 countries under various names. Walmart's RFID (Radio Frequency Identification) mandates, from the early 2000s to the present, have been a significant force in reshaping the supply chain landscape. These mandates require suppliers to adopt RFID technology and tag all pallets and cases with RFID labels. It helps Walmart in tracking and managing inventory, having complete visibility on the supply chain, and enhancing the customer experience.
In 2019, Walmart in the USA issued a mandate to all its suppliers of apparel, sunglasses, watches, and footwear to tag RFID smart labels on all merchandise including much of the jewelry items.
In 2022, Walmart took steps to expand their RFID implementation to Home Goods, and in a letter to suppliers it said, “Over the last year, we have successfully implemented RFID technology in our Apparel departments and have seen dramatic results.” The memo further added, “We have improved On Hand Accuracy, which has grown Online Order Fulfillment. These dramatic improvements have had major impacts on Sell Through and customer satisfaction.”
And thus, Walmart’s September 2022 mandate (It was implemented on September 2, 2022) expended the use of RFID technology in more categories including consumer electronics, home goods, furniture, home décor, bath & shower, bedding, automotive, toys, car batteries, sporting goods, etc., it required suppliers selling through Walmart in the USA, Puerto Rico, or on Walmart's official website to tag the items with RFID tags, in above mentioned categories, accordingly. Again in September 2023, Walmart expanded the RFID mandate to books, crafts, paints, hardware and other categories.
RFID smart labels contain electronically stored information on the RFID chip enclosed with the tag and this data can be read remotely using RFID readers. The Walmart mandates also include specific requirements for tag placement, data format, and transmission protocols. Compliance with these mandates is essential for suppliers who want to continue doing business with Walmart.
Apart from Walmart, retail firms like Target, Tesco, Macy’s, Marks & Spencer, American Apparel, JC Penny, and Zara have also adopted RFID technology to have complete visibility on their inventory and various retail supply chain operations. Back in 2003 Rite Aid and CVS worked with drug manufacturers and distributors to test RFID on prescription drug containers and bottles in 2004, Target also announced testing RFID in their retail operations same as Walmart. Tesco also began implementing RFID technology in 2003 which enhanced their inventory accuracy and reduced shrinkage. Uniqlo also used RFID tags to streamline their supply chain operations.
How Suppliers can Comply with Walmart’s Mandate: Implementation Strategies
To comply with Walmart's RFID mandates, suppliers need to invest in RFID technology and integrate it into their existing supply chain systems. This means that suppliers should adopt RFID tags that meet Walmart's specifications, as well as the install RFID readers and associated infrastructure. The suppliers must ensure that their data management systems are capable of handling the influx of RFID-generated data and integrating it into Walmart's supply chain management systems.
Adopting RFID technology in line with Walmart's mandates brings several benefits to suppliers as follows:
1.The use of RFID enhances inventory visibility and accuracy, leading to improved demand forecasting and inventory management.
2. RFID thus reduces stockouts and overstock situations, optimizing the supplier's inventory carrying costs.
3. RFID enables more efficient and accurate order fulfillment processes, reducing errors and improving overall supply chain efficiency.
4. Compliance with Walmart's mandates can strengthen the supplier's relationship with the retail giant, potentially leading to increased business opportunities.
RFID in Retail: Benefits for Walmart
Walmart's RFID mandates are not only beneficial for suppliers but also for the retail giant itself. The adoption of RFID technology allows Walmart to achieve real-time inventory visibility, leading to improved stock management and reduced out-of-stock situations. Walmart, as an early believer in RFID technology, is committed to implementing RFID in all its stores. Even in 2011, Walmart USA was to use RFID tags in apparel and footwear but unfortunately, that did not work out due to some patent issues.
The use of RFID tags enhances the customer shopping experience and helps Walmart maintain its position as a leader in the retail industry. Moreover, RFID-enabled inventory management supports Walmart's omnichannel retail strategy, allowing for seamless integration between online and brick-and-mortar sales channels.
Walmart's Previous Attempts at RFID Implementation
Walmart has a history of promoting RFID adoption within its supply chain. In the early 2000s, the company initiated a high-profile RFID implementation program, aiming to tag all cases and pallets moving through its supply chain. In 2003, Walmart announced that its top 100 suppliers across the USA would need to tag their products and packages with RFID tags, which at the time cost around 1.5 $ per tag. Similarly, in 2004 Walmart tested RFID implementation in various Dallas-based Walmart stores and distribution centers to streamline supply chain and inventory management and hoped that all domestic suppliers would adopt RFID by 2006. However, later when Walmart failed to share data on RFID benefits with its supplier, they stopped tagging cases and pallets and Walmart had to postpone the same, mostly due to the high cost of RFID implementation back then.
While the RFID initiative faced initial challenges, including the high cost of RFID tags and infrastructure, Walmart's steadfast commitment to RFID technology ultimately led to significant advancements in supply chain efficiency and inventory management.
RFID in Indian Retail Industry
RFID technology is also being used by various retail giants in India as well. Use of RFID labels on retail merchandise allows for end-to-end item-level tracking and identification which in turns offers various benefits to Indian retailers, including:
1.Item-level tracking
2. Enhanced in-store and inventory visibility
3. Streamlined supply chains
4. Order fulfillment
5. Enhanced customer experience
6. Retail theft prevention and reduced shrinkage
Retail and various other business owners can procure RFID tags, RFID scanners, antennas and printers by exploring our huge catalog of AIDC supplies on EnCstore.com. We provide all sorts of UHF RFID Tags, UHF RFID Fixed Readers, Handhelds and SLEDs, and Antennas, from various brands including Zebra, Impinj, Ruddersoft, etc., available at competitive prices.
To conclude, retail industry has been the biggest consumer of UHF RFID tags and the RFID retail market has witnessed significant growth over the last decade. As per surveys, the Retail RFID market is expected to reach 17393.09 million USD by 2027, expanding at the rate of 8.92% CAGR by 2027.
Walmart's RFID mandates have fundamentally changed the way suppliers manage their inventory and interact with the retail giant. Implementing RFID technology in compliance with Walmart's mandates allows suppliers to realize improved inventory visibility, order accuracy, and enhanced business relationships while Walmart benefits from optimized inventory management and strengthened omnichannel capabilities. As an early adopter of RFID, Walmart has been trying to implement RFID technology in all its retail stores since the early 2000s and the September, 2022 and 2023 mandates are another effort in the same direction.
Disclaimer: The information presented here is for general information purposes only and true to best of our understanding. Users are requested to use any information as per their own understanding and knowledge. Before using any of the information, please refer to our Privacy Policy and Terms and Conditions.
