Retail executives have always been intrigued by the vision of an entire store's inventory being counted instantly, with no human effort. Executives also want a system that will accurately reveal where every piece of merchandise is located in the store — and they want this visibility for all of their stores, not just a select few. 

 

This level of clarity is far superior to the shoddy information that retailers have traditionally been forced to rely on and it is a step up from the improvement now achievable using handheld RFID readers. One thing is certain: the surge in interest in this advanced form of solution shows no signs of diminishing, and there are technology companies that believe they are now capable of providing it to retailers. 

 

In recent months several of our retail clients have asked for our opinion of one such solution offered by a company called Mojix. The solution is said to offer all the benefits of expensive "active tag" RFID technology at a much cheaper price, essentially providing the visibility of a wall-to-wall real-time locator system using inexpensive "passive tags." 

 

We recently met with the Mojix management team and saw a demonstration of the solution in a simulated retail environment. Their solution appears viable in retail environments, and we think a number of retailers will begin evaluating it and similar "Hands Free RFID" solutions in their stores in the next 12 months.

 

 

Our definition of Hands Free RFID includes any solution that can provide a continuously refreshed picture of a building's contents and the ability to precisely pinpoint an item's location in the store automatically, with no human effort. This obviously has the potential to provide superior inventory accuracy and visibility than the current generation of RFID solutions.

 

Most retailers using RFID today are using either a combination of handheld readers and mounted readers or handheld readers only. Employees use the handhelds to take occasional cycle counts, to check in new merchandise shipments, and to hunt for items using the handheld's "Geiger Counter" function. Any implementation that uses handhelds clearly cannot be called Hands Free RFID. 

 

But there is more to Hands Free RFID than the lack of handheld readers. Even the strategic placement of mounted RFID antennas at all important points of inventory movement — the store's entrances, back doors, loading dock, interior doorways, fitting rooms and point-of-sale stations — would fail to meet our definition of Hands Free RFID. Why? Because today's solutions do not deliver the same level of accuracy and zonal visibility promised by Hands Free RFID.  

 

 

From a benefits perspective, Hands Free RFID offers the retailer several advantages over the current generation of RFID solutions:

 

1. Reliability Of Information: The quality of information produced when employees cycle count the store with handheld devices can be compromised if employees do not use those devices properly and diligently. If employees are not thorough, the information will be incomplete. Sometimes this requires bending down to read tags on a low shelf or positioning the handheld gun between stacks of product in order to read merchandise situated in back. Inconsistent execution is a legitimate risk.

 

2. Fast/Effortless Identification Of Items In Need Of Restocking: The ability to divide the sales floor into a large number of discrete zones, each of which can be constantly monitored, will provide retailers the fastest and most effortless method of identifying items in need of restocking (and identifying stray items that need to be brought back to their proper sales fixture).

 

3. Protection Against Internal Theft: Constant surveillance provides a powerful deterrent. Solutions that rely on handheld or stationary RFID readers to confirm inventory positions, while definitely an improvement over traditional inventory monitoring methods, still provide a window of opportunity to dishonest people. Hands Free RFID solutions provide superior protection against internal theft.

 

4. Web-To-Store Transactions: A growing number of retailers are providing shoppers the option of in-store pickup for purchases made using smartphones or computers. Some retailers offer pickup in a matter of minutes, depending on product availability. The ability to pinpoint an item's location is becoming increasingly critical.

 

5. Visibility Into Product Movement: Hands Free RFID provides retailers a complete view of an item's movement as it passes among the various zones in the store. This can be linked with the video footage captured by surveillance cameras to spot criminal activity, either before or after the crimes are carried out. Perpetrators can be identified and pursued. Visibility into product movement can also give retailers a better understanding of shopping patterns.

 

6. Labor Hours: The need for cycle counts is eliminated. The time devoted to that task can be allocated to other activity or removed altogether from the store's allotted labor hours.

 

 

Hands Free RFID has been used successfully in distribution centers, factories, ports and storage yards. It has yet to be deployed in stores. The solution has been shown to work in staged demonstrations, in simulated retail settings. The next step is to prove that the solution can scale effectively in real stores. There is no reason to believe this cannot be achieved, but the following issues need to be addressed in order to make it a mainstream solution:

 

1. Tag Performance: The preferred approach today for Hands Free RFID involves the placement of antennas overhead. While it's true that there are several tags that can be read very well from above, most of today's passive RFID tags may be challenged. While this is not an issue for vertically integrated retailers, since they can mandate the use of specific tags on their merchandise, this will present a challenge for retailers who sell products from a variety of suppliers. We believe that this issue will over time be resolved and that a large percentage of tags on the market will ultimately meet this performance requirement.

 

2. Metal Shelving: Even when the retailer uses the most optimal tags for overhead reading, the performance of the system could be compromised in stores with many metal shelves. The merchandise on the top shelf should be readable without any difficulty, but the metal shelves could shield most of the contents of the remaining shelves, rendering much of the merchandise unreadable. There will be many retail implementations where this is not an issue.

 

3. Aesthetics: We are told and believe there are many ways to deploy the Hands Free RFID hardware. Configurations will naturally vary, based on the unique realities of specific properties. Some retailers may wish to discreetly cover the hardware. There are several ways to do so, including hiding it above a store’s ceiling panels. But there may be stores where the appearance of the implemented solution will be less than ideal. Individual retailers will make their decisions based on their own particular requirements.  

 

In addition to the issues above, retailers should also be aware of the following short-term consideration. At the time of writing, the Hands Free RFID solutions have not been integrated with the leading RFID middleware packages. The software providers can complete this integration very quickly once they elect to start, and we expect they will do so by the end of 2011.

 

The first task is comparatively simple. It involves writing code to allow the data generated by Hands Free RFID to feed into the middleware package's existing reports. In addition, though, there are new reports that the middleware providers must develop. These new reports will create actionable data that will allow retailers to make use of the highly granular information captured by the Hands Free RFID system on the location and movement of inventory. For example, one report may show the movement of a stolen item between the many discreet zones of the store before the product exited the store. 

 

Intuitively, given the potentially large incremental value of Hands Free RFID, one might presume that it will always cost more than traditional RFID solutions. After all, in addition to the purchase price, there are deployment costs and maintenance costs. We do not share this view. We predict there will be instances where Hands Free RFID costs less than using the current generation of RFID technology.

 

That being said, we do not foresee Hands Free RFID being cheaper than implementations that rely solely on handheld readers. But the business benefits delivered by a "handhelds only" solution will be much smaller, and we believe many retailers will ultimately want more functionality than that type of approach can deliver.

 

The cost of advancing beyond the current generation of RFID solutions is the difference between the cost of Hands Free RFID and the cost of the next best alternative. Essentially, that means comparing Hands Free RFID to the most equipment-intensive Traditional solution that the retailer would likely elect to deploy.

 

In addition to purchase price, installation and maintenance costs, retailers should also consider the cost (or value) of the labor needed to perform cycle counts with handheld readers.

 

Ultimately what matters most is ROI, and this can only be assessed by projecting the costs and benefits of many different solution footprints. The best way to do this is to first identify and rank the operational issues that have prompted you to explore RFID in the first place. The next step is to attach dollar values to the opportunities. Often this will involve an independent audit of existing operating conditions. Pilot implementations then serve an important function because they allow you to validate your initial benefit projections. 

 

 

Retailers aiming to operate with significant precision should consider evaluating Hands Free RFID in their stores. Under no circumstances should retailers treat the emergence of Hands Free RFID as a reason to delay their adoption of RFID. Hands Free RFID actually presents a compelling reason to accelerate adoption plans.  

 

In the future it will be difficult for retailers to succeed without substantially increasing the level of inventory transparency and accuracy they provide their employees and shoppers. We believe Hands Free RFID is very promising. That is why we are encouraging our clients to evaluate Hands Free RFID in some stores and the traditional solution in others, so they can see for themselves how Hands Free RFID measures up.