From Mandate to Mainstream: The Role of RFID in Retail Innovation

The retail industry has evolved dramatically over the past decade and has seen more foundational changes than it saw in the last century, only expedited by COVID-19. 

Among those driving innovation in the retail sector is Walmart, which in 2020 began requiring that its apparel suppliers add RFID tags to the items they deliver to the retailer.   

Attaching an RFID tag encoded with item-specific information to a product gives it a “digital twin”—each physical item is linked to its digital record in the cloud —that can deliver real-time insights into the status of every tagged item from source to sale.

Walmart’s RFID tagging mandate originated to help the vast global retailer quickly and accurately locate items, ensuring on-shelf availability and faster omnichannel fulfillment. Now expanded to more than a dozen categories, including apparel, books, electronics, and toys, the RFID tagging mandate has driven significant value across Walmart’s operations—value which retailers of all sizes stand to gain as the concept and its underlying technology build momentum.   

Prevalence of RFID Tagged Items Provides Opportunity

For retailers who haven’t yet implemented RFID tagging across their own value chains, there is increasingly more reason to do so.

First, retailers can expect more of the goods they receive to already be tagged. There are three primary drivers behind this increasing volume of tagged goods.

1. Retailer mandates like Walmart’s will continue to expand to more categories and individual items. 
2. Other large retailers are launching their own tagging programs. 
3. Retail suppliers stand to capture benefits by tagging all of the goods in their value chain – even those that aren’t destined for retailers with RFID tagging compliance programs. 

Additionally, Walmart’s mandate reflects a broader industry imperative that has spurred innovation in the technology itself. In order to tag every item, performance, size, and material requirements must be met for a broad range of product categories. There has been enormous innovation in the RFID ecosystem in just the last few years, driven by the need to keep pace with increasingly sophisticated retail supply chains and shifting consumer expectations.

As some retailers are already discovering, RFID tagging enables organizations to deliver a host of customer experience innovations. Everything from the next generation of automated self-checkout, loss prevention, and even in-store and online shopping support—like instantly finding out if an item is in stock—make it easier to delight customers.

Ultimately, these drivers demonstrate that, far from a niche technology, RFID has entered the mainstream as a proven pathway to operational efficiency, resilience, and innovation.

How to Begin RFID Tagging

As you consider implementing RFID, there are a few basic steps to help build a successful program.

• Determine if your suppliers are subject to existing RFID tagging mandates. If the answer is yes, learn what processes and systems they already have in place. 
• Find an expert partner that knows your business. The right partner will have deep expertise in RFID technology and how it can be tailored to fit your business. It’s important to establish a trusted partnership early, as this expertise will influence your program from the ground up.   
• Understand your objectives to determine scope. Are you interested in tagging certain categories of goods, or your whole inventory? Will you roll it out in phases, or all at once?   
• Define a basic tagging strategy. RFID tags can be attached to or embedded in products or packaging, from tiny pieces of jewelry to tires to large kitchen appliances, with each product's type and material make-up determining the style of RFID tag it will require.   
• Define a basic reading strategy. Your tagging strategy and existing processes will influence where to track items—such as in factories, warehouses, or distribution centers. You must also determine the optimal mix of read points and whether you want them to be manual (handheld by staff) or autonomous (fixed infrastructure that does not require additional labor support). 
• Identify your earliest tagging opportunity. The further upstream you can integrate RFID, the more opportunity you create to strengthen your inventory visibility, and the greater your potential to see speed, efficiency, and accuracy gains.   

What began as a compliance-based mandate is emerging as an industry standard. Retailers like Nordstrom, Macy’s, and Uniqlo, as well as chains including McDonald’s, Chipotle, and Tesco are implementing and innovating with RFID, each adding to the body of industry-specific knowledge that will help retailers at the start of their journeys build effective, transformational RFID deployments.

Ashley Burkle is retail business development director for Impinj.