Walmart was a big proponent of RFID tags in the early 2000s and even tested it in Dallas area Walmart and Sam’s Club stores, but it was too expensive to put on a 99-cent bottle of shampoo.
RFID tags were supposed to replace the trusty bar code, but 20 years ago, the technology was still too expensive.
Now a Plano-based company is betting that the adoption of radio frequency identification tags is about to spread throughout the industry, particularly in apparel, shoes, cosmetics and home goods.
The RFID software business of Hong Kong-based SML has expanded its Plano headquarters on International Parkway with an 8,000-square-foot facility that includes a mock store, a back room and a warehouse conveyor section to teach retailers how to use its systems.
“The technology has gotten better and cheaper,” said Dean Frew, SML’s chief technology officer. The company is the second-largest RFID firm behind No. 1 Avery Dennison. Last year, it sold 1.5 billion RFID tags to retailers that include Uniqlo, Tommy Bahama and Tesco.
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Other companies that use it now include Zara, H&M, Target, Nike and many other consumer brands, mostly those that control their supply chain or have private brands.
What does this mean for retail? Consumers will find their size and color in stock more often, and millions of retail workers, who have to physically count or scan items one at a time, will be happier. RFID tags cut down the time it takes to inventory a store from days to hours. Waving a scanner across a table of folded sweaters or jeans or a rack of blouses captures inventory information faster and more accurately.
“If your brand of green beans isn’t on the shelf, you’ll grab a different one,” Frew said. “But if that red blouse in a specific size is missing, the store will lose a sale.”
Some stores are operating with 70 percent accuracy in their inventory, Frew said, and that’s weak for retailers trying to merge their online and in-store businesses for shoppers.
Only about 8 percent of the industry — mostly single-branded stores — is using RFID tags, he said.
Stores that have adopted RFID tags have increased sales from 2% to 9% while reducing inventory by as much as 10%, Frew said.
Frew is a former engineer and manager in packaging and logistics at Texas Instruments who later started his own RFID company in Dallas, Xterprise Solutions, when the technology was first looking for its place in retailing.
Walmart was a big proponent of RFID tags in the early 2000s and even tested it in Dallas-area Walmart and Sam’s Club stores. Many in retailing thought that tags would eventually replace the bar codes on consumer product packaging. The cost of a tag back then was as much as a dollar, so it wasn’t cost effective except for big pallets of merchandise. To add an RFID tag to a piece of apparel costs about 6 cents now.
As for future uses, it’s being talked about in the pharmacy business and in the airline industry for luggage tags.
SML has other tag reading technology in development, including a robot that will roll through the store on its own and a checkout system that reads several items at once inside a bin.
And here’s a way to figure out whether it’s an RFID tag: Hold it up to a light and look for the squiggly antennae embedded in the price tag.