The Truth about Wal-Mart's RFID Plans

Retailers, including Dillard's, JCPenney, Bloomingdale's and American Apparel, have publically talked about their RFID tagging efforts over the course of the last couple of years, with no particular public attention or concern. But when news was released that Wal-Mart is RFID tagging garments, the media went nuts as claims ran the gamut from concerns about consumer privacy and surreptitious motives to RFID redo circa 2004.

 

The truth is, the retail giant has never stopped exploring the potential business value of RFID, and has experimented with various use cases, from the pallet and case efforts of a few years ago to DVD tagging to the now well known apparel tagging efforts. These efforts are all aimed at improving the efficiency by which Wal-Mart does business, thereby reducing the price of goods conveyed to consumers.

 

The facts are as follows:

-- Wal-Mart is tagging jeans with passive RFID tags.

-- These tags are intended to be read by a handheld RFID reader.

-- These tags can be removed easily.

-- RFID tags will help Wal-Mart keep the right style, color, size of tagged product on the store shelf

-- The tags will facilitate cycle counting (taking inventory) of products on the sales floor and in the back room of a store.

-- These tags could help Wal-Mart correct inventories of stolen articles that have passed through the store exits (if they choose to implement this feature).

 

Tagging goods at the item level does not enable retailers to track consumers walking around in their stores, automatically tying frequent shopper or driver's license information to real time store movements, as at least one article claimed. Nor will passive RFID tagged clothing enable anyone to drive by someone's house and identify what the consumer has purchased, as if this would ever make sense -- there are so many more sensible ways to keep track or identify consumer shopping patterns.These ridiculous claims by uninformed writers are precisely what could slow retailer adoption, but I believe they are so absurd that they will not. Unfortunately, these claims do prejudice consumers, who generally do not understand how the tags work, but this can be remedied by the retailers engaged in RFID implementations.

 

The business case for RFID use in apparel has been well documented. The reliable autonomous collection of inventory data in apparel is truly a game changer for many. Many retailers are starting to implement or at least pilot the technology because of the significant business value associated with being able to find, count and track apparel without line of sight, including the following:

-- Reduction in inventory counting labor

-- Reduction in inventory

-- Increase in sales

-- Reduced shrink / increase in LP accountability.

 

In summary, Wal-Mart's' RFID efforts in apparel should not come as a surprise -- it is not unprecedented and, like other retailers, Wal-Mart has identified strong business reasons to pursue apparel RFID tagging at the item level. Furthermore, consumers need not worry that apparel tagging is somehow linked to "big brother" watching their every move. The RFID tagging efforts are instead, linked to the giant retailer's desire to continue to lower consumer prices, by reducing the cost of doing business.

 

To read this article in its entirety, including a review of the RFID technology market, click here.