Stores Magazine has a great story on how RFID seems to be finally ready for Retail. It has some great examples on how customers are using it and reaping benefits like achieving inventory accuracy of 95% or 17% improvement in inventory accuracy or 14% sales increases etc.

To describe retailers’ return on investment for item-level RFID projects as “impressive” may be the understatement of the year.

The Bloomingdale’s store in Manhattan’s SoHo district is achieving inventory accuracy of 95 percent, a lift in sales and margins and improvements in inventory shrink rates. At Dillard’s, a 17 percent improvement in inventory accuracy has been reported, along with time savings of 96 percent when it comes to performing cycle counts. And, with 100 percent of its merchandise tagged, American Apparel is achieving 99 percent inventory accuracy and a 14 percent sales increase.

RFID Data Integration comes as #3 in the list of Retailers planning for new technologies deployment after #1 demand signal technology and #2 predictive analytics.

Sahir Anand, vice president and principal analyst with the Aberdeen Group, says data his company has compiled reveals that an astounding 70 percent of retailers rate themselves “average” or “below average” when it comes to inventory management processes, citing lack of inventory accuracy, visibility and tracking capabilities as some of the key culprits. When asked about the technologies they would look to deploy in the next 12 months in an effort to enable better inventory management, 20 percent cited RFID data integration — less than the 30 percent who cited demand signal technology and 25 percent who intend to invest in predictive analytics.

If this is a question you are trying to seek answer to, I suggest head over to Cashier Live’s recently launched interactive microsite “Future of Retail”. New technologies like mobile advertising, in-store augmented reality, and cloud-based software are changing how retailers (big and small) sell to consumers. The microsite presents scenarios for Mobile coupons, Virtual mirrors, Welcome kiosk, Digital signage, Self-checkout, Email receipts, Store management, RFID tags and Purchase orders. For each scenario, there are Proof of Concepts which shows how the retailers are working or thinking about using these new technologies. For e.g. for Welcome Kiosk there is this cool Gap Welcome video from Minority Report.

Thought provoking article by StorefrontBackTalk on P&G’s decision to pull back from Wal-Mart RFID Trial. Key takeaway, The test failed and not the technology.

P&G’s Decision To Pull Back From Wal-Mart RFID Trial Quite Understandable

Say what you will about RFID, but it is the picture-perfect companion for hyperbole. Any development is either instant death for RFID or the magic trend that will make item-level RFID universal by late Friday morning.

It’s therefore not surprising that so much has been made of the decision by Procter & Gamble (P&G) to abandon its tagged promotional displays at Wal-Mart. On the one hand, this can be seen as a setback for such tagging projects. P&G touted the effectiveness of its display tagging project often.

Given P&G’s reputation for ROI worship, many assumed the company pulled the plug because RFID was failing the test.

What is closer to the truth is that the test failed, not the technology. And to the extent that Wal-Mart was as much a player in this trial as P&G, it could also be said that the test didn’t fail, the tester did.

IDTechEx, the leading independent research and consulting firm specializing in RFID technology is reporting that RFID Industry has followed the Gartner Hype Cycle. While the growth has reduced, it will still forecasts 23% growth in 2009 over 2008 and by 25% growth in 2010 over 2009.

These applications will eventually prevail, but probably not fast enough to create a profitable business for tag makers in the short term. For example, IDTechEx has recently surveyed RFID chip makers, and we find that in 2008 approximately 1 billion UHF chips will be made. The largest single order is by Marks & Spencer for 150 million tags for apparel, but the number two behind that is much less. Indeed, it is still rare to hear of orders of more than 1 million UHF tags - in other words, the applications of UHF RFID are many and small, reaching a wide range of different markets. Almost all are closed loop applications.

Indian IT major Infosys Technologies has developed Smart Visual Merchandising (SVM) based on RFID tags.

Passive RFID tags (a small circuit on a paper) each costing about Rs 10 are laid inside shirt or trouser packs. When a potential customer selects a shirt and brings it near a LCD panel, it displays all features of the shirt be it colour name, striped /checked, size, along with other sizes available in the same colour and their prices.
The technology comes handy inside a trial room. A touch on a display unit inside the trial orders a bigger/ smaller size at the counter, and a helper can hand over the same, thus saving time for both customer as well as the retailer.

Infosys has a tie up with Magic Mirror which takes the whole thing to a new level.

When a customer brings an RFID tagged piece of clothing in front of the magicmirror, it displays content which could include an in depth description of the garment, size and colour availability, mix-and-match style guides, and suggested accessories. If installed in the fitting room, customers can also contact a salesperson by simply touching the magicmirror without the trouble of getting changed and leaving the fitting room.

magicmirror provides retailers with a means to reach customers on an 'emotional' level and positively influence purchase decisions at the moment of choice. Customers are becoming more discerning about the products and services they buy at retail outlets. Retailers and brands are addressing this shift with new product propositions: limited edition designs, ethical trade and special raw materials are as important as the product itself. The ‘intangible' proportion of a product is justifying an ever-larger part of the product price.

Related Links:

On Camera- CNET covers Magicmirror®

Most of the times, some muscle is required to enforce rules and policies. Wal-Mart seems to be doing exactly that. To justify investments and contain costs of tagging RFID tags to unmarked pallets from Sams Club suppliers, Wal-Mart will charge suppliers a $2 fee for each pallet they ship to its Sam's Club distribution center in Texas that doesn't have an RFID tag.

Wal-Mart has apparently tired of its investments in radio frequency identification turning into a prolonged pilot study and is stepping up pressure on suppliers to comply with its 3-year-old inventory-technology mandate. The retailer says that beginning Jan. 30, it will charge suppliers a $2 fee for each pallet they ship to its Sam's Club distribution center in Texas that doesn't have an RFID tag. The charge is to cover Sam's Club's cost to affix tags on each pallet, says a Wal-Mart spokesman. "It's really designed as a short-term solution for those suppliers that may need a little more time to implement their own tagging solution," he says.

The retailer hasn't taken such a strong-arm approach yet with the more than 15,000 suppliers that still haven't complied with its request to tag pallets and cases headed for its Wal-Mart stores. Instead, it seems focused on turning its 700-store Sam's Club warehouse-outlet division into an example of RFID supply chain technology in action, down to requiring item-level RFID in 22 distribution centers by 2010. It makes sense: Sam's Club has far fewer suppliers than Wal-Mart stores, and customers buy products by the case, the pallet, or individual packages that are larger (like a 48-count box of granola bars) than what's typically sold in retail stores. That means fewer RFID tags, at about 20 cents a piece, which makes the cost more digestible for Sam's Club suppliers. The division contributed $41.5 billion to Wal-Mart's $344.9 billion in revenue for its 2007 fiscal year.

1. Why we should get retail right

Productivity in the retail sector is critical for understanding the relative success rates of national economies.

For example, India’s antiquated retail sector has yielded bizarre market distortions. “In India, the price of ready-made shirts from domestic manufacturers is about 35% higher than the price of a tailor-made shirt,” Lewis says. “The manufacturing cost of the shirt is about the same as the tailor-made price. However, the manufactured shirt has to get to the consumer. In India, that’s a huge problem because of the undeveloped retail sector.”

Lewis points out that productivity gains in retailing have dynamic effects throughout a nation’s economy. For example, when most Americans and others think of the drivers of the US economic performance, they immediately think of successful tech firms such as Microsoft and Intel, or innovative financial services players such as Goldman Sachs. However, it is efficiency gains in the retailing sector that powered much of America’s economic performance in recent years.

“Evolving to a more productive retail format mix,” Lewis says, “has large spillover effects in improving the productivity of consumer goods manufacturing and wholesaling.” The effect is enormous. Improvement in US retailing “was the single largest contribution to productivity acceleration in the US economy in the late 1990s,” he says. It trumped that of even the much-heralded Silicon Valley.

How is this possible? Lewis points out that “large-scale retailers improve their efficiency in part by buying in bulk from efficient, large-scale manufacturers. Thus, world-class British supermarkets, Carrefour and Wal-Mart have worked with suppliers in many countries to increase their scale of operations…” These efforts have “improved productivity significantly in the manufacturing sector itself”. What’s more, Lewis continues, “world-class retailers have reached a scale that allows them to bypass the wholesale sector and buy directly from manufacturers. This...has put enormous pressure on wholesaling to improve its performance.” Thus, greater efficiency in retail yields greater efficiency and productivity in sectors such as manufacturing and wholesaling. These beneficial spillover effects can be further found in transportation, agriculture, textiles and more.

2. Holiday Online Receipts Are Strong, but Reflect a Decline in Rate of Growth

The latest mixed-bag of news for retailers hails from cyberspace: holiday e-commerce sales were robust, but showed their slowest-ever growth, industry analysts projected.

The sales growth of 19 percent, while enviable for traditional retailers, was down sharply from the 25 percent to 30 percent growth rates of recent years. Retail industry analysts said the deceleration underscored a tight economy, but also reflected changing consumer and retailing habits.

And it is consistent with a broader slowdown in the growth rates for Internet retailing — making the holidays of 2007 a vivid example of the changing growth curve for online sales.

When the receipts are tallied from this holiday, American consumers will have spent around $29.5 billion at Internet shops, according to projections published by comScore, a market research firm. “The growth rates for previous years were clearly much higher,” said Andrew Lipsman, spokesman for comScore. The research firm did not have growth rates before 2003, but Mr. Lipsman suspected that they were 25 percent or more.

3. RFID poised for the big time in 2008

Next year will witness the spread of RFID applications into familiar, everyday settings, while consumer electronics, wireless technologies and security requirements will continue to benefit from the integration of RFID.

4. How Wal-Mart stole Christmas

After years of being trumped by Target on holiday sales, giant retailer is poised to come out on top. Analysts point to more effective marketing and pricing.

RFID Journal is reporting on Reliance Retail's RFID Plans.

Reliance Retail, one of India's largest retailers, has been testing RFID technology and is preparing applications for use at a large number of its hypermarkets and supermarkets, as well as its electronics and convenience stores. The company has already equipped these stores with data ports and wireless computer networks able to support RFID systems.

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Reliance Retail has drawn up plans for using RFID to support its operations. The company has developed five RFID-deployment scenarios, including the tracking of reusable crates of fresh food; item- and case-level tracking of high-value goods; and pallet and case tagging of various goods.

Reliance has performed proof-of-concept tests using passive EPC Gen 2 UHF RFID tags to track crates of fresh foods and cases of high-value goods. The company managed to achieve above 90 percent read rates and found that RFID helped it reduce shipping and receiving errors while increasing productivity. For the test to track individual items and cases of high-value goods, Reliance Retail has recently conducted a pilot between one distribution center and one Reliance Digital store. This pilot is still under evaluation. Reliance is now working with various RFID hardware and tag suppliers to obtain improved read rates for the tracking of fresh-food crates, as well as planning a permanent rollout of other scenarios upon successful completion of the pilots.

With Reliance Retail's plans to have their own supply chains, Reliance could very well be the first retailer in India to implement RFID across stores and it's supply chain.

The growth of Organized Retail sector in India is bringing new focus from global technology companies. Sometime back I had blogged about IBM's launch of customized Store Integration Framework (SIF) solution for Indian retailers. HP is now in the news for launching it's RFID offerings for Indian Retail.

Hewlett-Packard has launched radio frequency identification (RFID) products for the Indian retail market. Built on its internal RFID expertise (28 sites fully operational with RFID worldwide), HP has extended the RFID services to Indian customers as part of their TSG portfolio.
The new offerings designed specifically for the supply chain would assist retailers in reducing stock outages, asset shrinkage and enhancing supply chain visibility. Through RFID, retailers can experience improved supply chain efficiencies leading to greater accuracy of inventory tracking, faster through-put and reduced demands for labour-intensive stock checks.
RFID has matured in sophistication and is now increasingly used across a wide range of industries and applications as a critical technology tool to enhance business efficiency. RFID smart tags provide real-time data from the supply chain, into the stock room and out to the selling floor. Over the next few years, HP expects its usage to be even more pervasive as consumers increasingly recognise the value and convenience enabled by RFID, it will become a mainstream feature of tomorrow’s retail world.

I believe Indian Organized Retail Sector is a goldmine yet to be explored fully by global Retail Technology companies. We should be seeing more such news coming in the next few months.

A newly published study finds that apparel and footwear retailers can expect a quick and significant return on investment from deploying RFID at the item level.
RFID Journal

Forrester Report, RFID Beyond The Supply Chain in the Microsoft Executive Circle Magazine.

Forward-thinking consumer products (CP) manufacturers and retailers aren't limiting RFID to the supply chain. Firms like Kraft Foods and GlaxoSmithKline are testing new RFID processes like production management, market research, promotion execution, and in-store consumer services. As the uses of RFID become more fragmented, so does the vendor landscape. The result? The death of the RFID market as we know it and the emergence of process-centric solutions and technology innovation networks.