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RFID tags can deliver real boost to sales: study

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Retailers that use radio-frequency identification tags – RFID for short – can expect to see their sales increase, suggests a new study, which analysed the use of the tags by 10 retailers and found increases of up to 5.5%.

The measuring the impact of RFID in retailing study, from Professor Adrian Beck at the University of Leicester, and supported by GS1 UK, the supply chain and data standards organisation in partnership with ECR Community’s Shrinkage and OSA Group, is thought to be the most comprehensive study test of the technology. It involved leading retailers and brands Adidas, C&A, Decathlon, LuluLemon, Jack Wills, John Lewis, Marc O’Polo, Marks & Spencer, River Island and Tesco.

Professor Beck combined face-to-face interviews with quantitative data on business performance to find that all the companies saw a positive return on their investment on using RFID, and that all saw the increased stock availability that came through RFID boost sales. How much the sales boost was varied between 1.5% and 5.5%, equating to a sales boost of between €1.4bn and €5.2bn. Retailers said inventory accuracy improved by more than 50%, reaching between 93% and 99% accuracy. Six of the ten companies involved said they were able to reduce their total stockholdings, by between 2% and 13% – while the remaining four companies did not share this detail.

All ten companies believed that using standards supported an easier RFID implementation and broadened the network of technology providers. The importance of integration of new RFID data with existing systems was flagged up as the biggest challenge by all the retailers. Virtually all called on external help to deliver their RFID plans and implementation.

Richard Jenkins, head of RFID and loss prevention at Marks & Spencer, said: “’We were pleased to be asked to participate in such a comprehensive and thorough study into the state of RFID in retail today. This exciting technology innovation for retailers is often misunderstood and shrouded in mystery. Hopefully this new report will dispel some of the myths and provide valuable new insight to assist all of us that are on the RFID journey.”

John Fonteijn, group chairman from the ECR Community Shrinkage and On-Shelf Availability Group, said: “As a technology, RFID has often struggled to live up to the hype surrounding its use in retailing, but as Professor Beck’s research shows, in the right environment, and by adopting a realistic and measured approach to its use, RFID now offers an attractive financial proposition to those retailers willing to invest.”

Gary Lynch, chief executive of GS1 UK, added: “This independent research highlights the clear commercial and operational benefits and challenges for both retailers adopting RFID within their businesses. As owners of the EPC industry standard for RFID, GS1 UK is able to offer neutral advice to help retailers and solution providers on their RFID journeys. The learnings covered in this report provide an indispensable guide for any retailer interested in deploying the technology.”

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