Walmart's RFID Mandate: A Prequel to Wider Retail Adoption

Earlier this year, Walmart issued a new mandate which required suppliers in certain departments to begin providing RFID tags, joining retailers such as Nordstrom in expanding its use of the technology. Having succeeded with its use of RFID for its apparel products, Walmart has told its suppliers that any brand supplying products for its home, entertainment, or hardline departments across the U.S. will be required to tag their products with RFID technology by September of this year.

Commenting on the revelation, Shelly McDougal, senior director of merchandising at Walmart, said, “We've seen dramatic results in our ability to ensure products are available for our customers.” She adds that the above has resulted in improvements in online order fulfilment and overall customer satisfaction.

Walmart is a true pioneer within the retail industry, having achieved an eye-watering $573 billion in global revenue last year. Any change the retailer makes is almost certain to ripple across the industry, and RFID implementation is no different. Walmart could initiate a chain reaction for a near-universal adoption of item-level RFID in retailers across the U.S., with analysts across the retail sector already admitting that they anticipate a near-universal switch to item-level RFID after the announcement.

Powering Advanced Retailing With Item-Level RFID

Thanks to industry standardization efforts, item-level RFID solutions have become easier to adopt and much more affordable. Since its initial adoption in 2005, RFID tag and reader prices have dropped significantly. RFID technology has seen a dramatic performance improvement with solutions delivering compelling returns on investment, and enterprise efficiencies enabling improved profitability.

The affordability and accelerated ROI that RFID technology offers are the reason behind its global appeal. Because RFID enables regular in-stock inventory analytics, retailers can effortlessly determine where and when an item has been sold or disappeared within the supply chain. More than 40 percent of retail shrinkage is accredited to employee theft. Item-level RFID discourages internal shrink, and integrating RFID allows retailers to identify if items left a store without being purchased.

Harnessing Multiple Retailing Benefits

This real-time location mapping of products and the status of an item within the supply chain substantially increases inventory accuracy up to 95 percent. McDougal wrote on LinkedIn, “[Walmart’s RFID effort] has improved inventory accuracy, but more importantly, has helped us to better serve our customers.”

Like Walmart, Macy’s also implemented item-level RFID tags to better track its inventory. In 2017, the department store chain boasted a 50 percent reduction in out-of-stock items, resulting in an 18 percent increase in sales. Inventory accuracy is one of the top reasons retailers choose to adopt RFID technology. With the boost in e-commerce purchases and buy online, pick up in-store (BOPIS) options, numerous consumers are opting to shop from brands that offer an effortless customer journey. To deliver on the increasing customer demand for fast delivery, retailers need to improve their inventory management and tracking — and RFID technology offers just that. The high level of visibility and accuracy the technology offers makes omnichannel fulfilment attainable.

Walmart clearly stated that it has merely implemented RFID solutions for inventory and supply chain management. However, RFID can offer so much more. From real-time inventory visibility and journey options such as BOPIS and BOPAC (buy online, pick up at the curb), advanced business analytics, to improving self-checkout and reducing checkout waiting time, RFID increases the overall customer experience and, consequently, enhances engagement.

McDougal further explains, “We look forward to expanding the technology into more categories, to further improve inventory accuracy across the business, provide a better in-store shopping experience for customers, and drive more online and pick-up-in-store capabilities.” RFID has the ability to move beyond inventory management and offer more benefits to enhance the shopper's journey.

Future Impact on Industry

Industry leaders concur that RFID technology will play an increasingly larger role in the retail sector, and the mandate presented by Walmart will only accelerate its universal adoption.

Customers are starting to demand more transparency about the products they consume. By connecting RFID technology to consumer-facing software, such as QR codes, retailers can offer consumers more information about a product’s production, materials, and lifecycle, as well as how to care for and recycle the product.

Based on RFID tag growth, it's evident that the technology is delivering the desired results. Retailers are expanding the deployment into multiple categories, resulting in endless opportunities to increase their ROI. Most retail implementations of item-level RFID solutions start with the need to gain more accuracy on inventory. Still, the expansion includes solutions that enhance the overall customer experience, such as on-hand availability, smart fitting rooms, and seamless checkout points.

Ultimately, RFID has worked behind the scenes of many retail operations as a valuable asset to support customer-driven innovations. In its versatility, RFID can cultivate reassurance in brands to aid them in increasing sales, whether in times of economic prosperity or the challenging time of crisis. RFID can offer solutions for brick-and-mortar stores as well as online and omnichannel retailers. The opportunities are endless, and this mandate presented by Walmart is just the beginning.

Gary Moskovciak is the senior vice president at the Americas, SML Group, a provider of innovative item-level RFID and brand identification solutions.