RFID in Retail: The ‘unfashionable’ technology that is transforming India’s $1.4 trillion retail industry

Experts believe that just as Blockchain has transformed the digital landscape, RFID is poised to revolutionize the physical world and it is bringing the offline-to-online business model alive.
RFID in Retail: The unfashionable technology transforming retail industry globally
RFID in Retail: The unfashionable technology transforming retail industry globally

Tata Group’s Trent Limited CEO Venkatasalu P recently made an interesting revelation in the Phygital Retail Convention in Mumbai. When asked about keeping business simple, he emphasized on backend RFID technology implementation, instead of customer facing technologies like mobile apps and online shopping platforms, for delivering customer outcomes. The likes of Zudio and Westside are brands under Trent Limited, known for their smooth customer experience in offline retail, have gone 100 per cent RFID in their fashion business.

And its not just India, but also leading economies like China which are gung-ho about RFID in Retail. BingoBox, the unmanned convenience stores in China, are an example of the RFID-based phenomenon ‘New Retail’ – a term coined by none other than Alibaba’s Jack Ma.

With the integration of augmented reality (AR), virtual reality (VR) and facial recognition, New Retail in China has blurred boundaries between brick-and-mortar stores and online platforms, creating an ecosystem that offers convenience, personalization, and entertainment. Customers are scanning RFID-labelled items and paying through WeChat at self-checkout machines at BingoBox.

Offline Blockchain

An optimal scenario for both customers and any retail brand entails the following: Customers consistently find and purchase the products they seek during every store visit, while businesses efficiently manage their inventory by retaining high-demand products and discounting those with lower demand. However, surveys and news reports suggest a stark and different reality. Over 40 per cent businesses experience inventory-related stockouts while around 80 per cent of customers say they are willing to return to a store if they get products they are looking for.

To explain further, imagine you visiting an apparel store. Traditionally, the customer would try out some items and may or may not purchase it. There was no means to track how the customer discovered the store, what were their preferences while looking for products, what worked or went wrong during the trial, and whether the customer is likely to visit the store again. But now, with RFID tagged apparels and other items, customer preferences can be tracked.

For example, retailers can get data about which items have been tried the most, which are sold or unsold with or without trial, etc. A complete persona of the customer can be created and analysed with the help of item-level RFID tags at retail stores. Basically, it helps retailers capture touch-points at their offline brick-n-mortar stores just as it is done on online shopping or ecommerce platforms.

Experts believe that just as Blockchain transformed the digital landscape, RFID is poised to revolutionize the physical world and it is bringing the offline-to-online business model alive. Radio Frequency Identification (RFID) provides a unique identifier for each product. It creates a transparent and traceable record of its journey from production to consumer. This level of visibility empowers retailers to combat counterfeiting, optimize inventory management, and enhance customer service.

Robust Tech

Today, consumer expectations are at an all-time high, and retail businesses are constantly striving to deliver superior customer experiences. While envisioning exemplary customer service, images of sleek online interfaces, friendly chatbots, and seamless phone interactions often come up.

In the modern retail landscape these initial contacts are often hailed as the defining moments of a company’s customer experience strategy. And while these customer-facing technologies play a pivotal role, the true backbone of exceptional customer service lies in the sophisticated backend technological infrastructure that powers it all.

Customer-facing technologies such as AI-driven contact centres, self-service portals, and omnichannel support systems are instrumental in crafting memorable customer experiences. They streamline processes, reduce customer effort, and offer unparalleled avenues for engagement with brands.

However, beyond the flashy facade of front-end interactions lies a realm equally crucial to customer satisfaction: the supply chain and omnichannel fulfilment. Customers do not just seek a pleasant initial encounter; they expect efficient resolutions to their queries, delivered promptly and accurately. This is where the significance of robust tech infrastructure truly shines.

The adoption of RFID is no longer a question of technology feasibility but rather one of implementation and operation. While the cost of RFID tags has remained relatively stable over the past decade, the value proposition of RFID has grown exponentially. Retailers are increasingly recognizing the ROI of RFID investments, as the technology enables them to streamline operations, reduce costs, and enhance customer experiences, say experts.

Data empathy

Globally, retail industry is increasingly using RFID technology to capture data from the products. This data is communicated, stored, and being processed for business intelligence. Retail industry is also capitalizing on data empathy, which is the ability to understand and share the feelings of others based on data. It is going beyond the numbers and understanding the human stories behind them. It is using data to connect with people, not just measure them.

Retailers are making more informed and humane decisions based on the product-related data collected in-store. This data is helping them build semi-fictional representations of ideal customers. Using customer personas, brands are better understanding their target audience and developing marketing campaigns resonate with consumers. They are also measuring the impact of their customer retention initiatives by tracking metrics such as customer lifetime value, churn rate, and repeat purchase rate, to know if they are working.

Retail brands are understanding customer journeys, identifying where customers are dropping off and making changes to improve the overall experience. Business intelligence solutions like fitting-room analytics are evolving as a powerful tool to personalize product recommendations, targeted promotions, and improved customer service.

This is why Trent Limited CEO preferred tackling their internal processes first instead developing fancy customer-facing apps. RFID is poised to play a pivotal role in the future of retail, particularly in fashion and apparel, footwear, and digital electronics. Its ability to capture granular data about products and consumer behavior will enable retailers to make data-driven decisions that optimize their operations, enhance customer experiences, and drive business growth.

To paraphrase Venkatasalu P., businesses are taking time to digest the complexity of changing processes to land outcomes that they are seeking to address. Cultural anchoring of choices and discipline would help brands land customer outcomes much better.

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