Back in May, I recounted a panel discussion at the Retail Business & Technology Exposition (RBTE) in London, regarding “RFID (Radio Frequency ID) in Real Life “. The discussion included representatives from Marks & Spencer, John Lewis, and River Island, and the speakers were remarkably candid about the benefits of item-level RFID tagging. As I recounted in the May Retail Paradox Weekly piece, “The numbers are compelling. River Island… has been able to improve stock ledger accuracy from about 75% to 99%. Similarly, M&S… has been able to measure a 14% improvement in inventory accuracy. That level of accuracy delivers three benefits <at John Lewis>: sales lift, stop-loss improvements, and a 30% productivity improvement in store associates’ cycle counting and replenishment activities… the productivity improvements are important because store associates can redirect their efforts on more selling activities that improve customer service. “

Despite the benefits that RFID adopters report, most retailers have not yet adopted RFID. From the May article: “the 2016 RSR study showed that it’s still early days for the technology; while a majority of retailers indicated that ‘RFID for item-level inventory’ and ‘RFID for supply chain inventory tracking’ have ‘a lot of value’, only 30% of Retail Winners (and less of everyone else) report ‘implemented and satisfied’ status. ”

It was with these dueling perspectives that I attended the annual U.S. meeting of the RAIN (RAdio IdentificatioN) Alliance meeting in Seattle last week. The alliance is an organization dedicated to the adoption UHF RFID technology, including integrated chips, tags, readers, and software (no long winded explanation of these things – just the short version: RFID integrated chips are connected to antennas that are embedded into tags, which produce a signal that can be read by either handheld or fixed positions readers, which then deliver the resulting message to some software). The alliance boasts 154 member companies globally, and the vision of the group (according to RAIN Alliance president Steve Halladay) is to “identify, locate, authenticate, and engage ‘things’ – connecting billions of everyday items “. If that sounds lofty, try this on for size: the alliance estimates that by 2020, there will be nearly 20 billion devices in place, able to read the 100 billion tags in use. If you’re skeptical, here’s a dose of reality: for 2017, it is estimated that 8.7 billion RAIN tags will be sold for retail apparel alone.

According to the RAIN Alliance’s Kerry Krause, growth is being driven by the following factors:

• Robust standards with “Gen 2 ” RFID (implemented in the last decade)
• Performance improvements in UHF RFID performance
• An established value chain
• High confidence from adopting industries (including manufacturers, retailers, healthcare, packaging companies, and technology providers)
• Interest in IoT

Amazon‘s Jeremy Dashe (Principal Engineer for Amazon Fulfillment Technologies), put RAIN RFID’s value in the context of the company’s “customer-centric ” strategy. The technologist pointed out that RAIN RFID directly solves certain problems for consumers (for example, “location ” – where an item is, “authenticity ” – is it “real “?, “safety ” – for example, the history of the temperature of a food item, and “ethics ” – for example, the country of origin). But the technology also indirectly solves one of the Retail industry’s biggest challenges: “getting people their stuff quickly! ” Dashe used Amazon Prime Now (Amazon’s same day delivery service) as an example. As Jeremy pointed out, “the crazy accomplishments of yesterday become requirements today ” – in other words, Amazon is challenging the entire industry to meet or exceed new customer expectations that the Seattle company is creating with its “crazy accomplishments “. And RAIN is part of the technology that can make it happen.

Connecting An Item’s Physical Life To Its Digital Life

“Inventory accuracy ” is the key driver for RAIN RFID in retail today – virtually everything “out there ” points to the benefits that greater accuracy would create: real time visibility (a key requirement for omnichannel selling), improved service levels, faster turns, and less shrink. That should be enough to capture any retailer’s attention. But let’s imagine a world where everybody has achieved those objectives – then what?

Impinj CEO Chris Diorio painted that picture for the attendees. He rhetorically asked the question, “suppose you wanted to connect everything in the world? ” He then went on to answer the inevitable followup question, “why would you want to do that? “. In the future-state that Chris described, people and businesses could connect with “things “, to identify, locate, and authenticate them, and to access the attributes and history of those things. Diorio called this “connecting an item’s physical life to its digital life “.

To illustrate the vision, Chris used a non-retail example, but one that every traveler could understand – luggage. In the future, every piece of luggage manufactured would have a RFID chip embedded in it (just as some automobiles do today). When a consumer bought a piece of luggage, the retailer would transfer ownership of the bag to the consumer. If the bag was to be shipped to the consumer, the shipper would log the electronic ID of the bag, which the consumer could then track. When the bag arrived at the house, the consumer could use an app on a mobile device to register the warranty. When that consumer went on a trip, the bag could be associated with the plane ticket, and TSA would be notified to expedite the security checking process. The airline would track the bag, and could send alerts to the traveler’s phone of the status of the bag.

That story illustrates what Diorio meant by “the digital life of the physical item “. It sounds good! But what stands in the way? According to the CEO, there are several really BIG issues:

• Today, there are several numbering systems that identify RFID-tagged items, without name resolution (i.e. the numbering schemes are specific to their proprietary purposes, and don’t say what that item actually is);
• An item’s history isn’t accessible;
• Item attributes aren’t linked;
• Item “ownership ” isn’t an Internet concept

Those are indeed big issues, but they don’t stand in the way of getting the value from improved inventory visibility and accuracy. But they do prevent a retailer or a consumer from connecting to the Internet to get more information. What information? All those attributes – data about the item’s life before it hit the retailer’s selling environment. The problem is that there is no entity in existence right now that would make that possible.

Amazon’s Dashe had an answer for that. He said, “let there be a central authority – like ICANN[1] – to vend unique ID’s for items, that is not beholden to governments or corporate entities. Let it provide a means to map these unique IDs to individual items “. Given the current international political climate, and all the wrangling that occurred in 2016 when the U.S. government released ICANN from its direct control, you wouldn’t be alone if you are skeptical. But both Diorio and Dashe believe it will come to be.  Said Dashe, “we are right on the brink of making some of these things happen! “

What’s likely to kick such a vision into the real world won’t be companies, but consumers. According to RAIN’s Krause, the “end game ” technology will be RFID reader technology embedded in smart mobile devices. While only about 500,000 such smart phones will be in service by the end of 2017, massive adoption is expected in the next four years. And so as we’ve seen before, given the opportunity, consumers will search for and use new information to address their everyday needs. That should push industry and governments to act (stay tuned!).

Right Now

While the retail industry may be waffling about RFID, those companies that have already adopted the technology are forging ahead. There’s a lot of activity happening right now in supply chains, where companies are particularly focused on “provenance ” -knowing where products came from, and that companies AND consumers are getting what they pay for. For example, Walmart is pushing ahead to establish “farm to fork ” tracking for food, the electronics industry is implementing “tamperproof provenance ” as an anti-counterfeiting measure, poultry and fish producers are also establishing tracking for food safety, and big pharma companies are working towards 2023 compliance of California laws regarding controlled drug provenance.

The bottom line is that RAIN RFID, as part of the overall push for IoT, is big, it’s real, it’s affordable, it’s delivering value, and it’s the future. Retailers can’t wait much longer to get on the change train.

ED. NOTE: RSR is currently seeking your input for its 2017 study on the state of IoT in Retail, Getting Past The Noise In IoT In Retail. Your input into this subject is very important to us – Please take 10 minutes to answer our confidential survey!