Question

What are The Advantages of Incorporating Radio Frequency Identification (RFID) Technology in Retail Stores?

 

 

Answer 1

Research Results/Findings

 

Beginning with a full set of RFID peer-reviewed articles, 116 peer-reviewed articles mentioned several uses and benefits of RFID technology in the retail industry as shown in the Table 1 below. From the table, it is evident that RFID technology improves the levels of customer service and security against fraud, theft, counterfeiting, and loss in the retail stores. It also reduces cases of stock outs in addition to improving the accuracy of the data, as well ass enhancing the real-time visibility of the data. These are some of the critical reported benefits of RFID technology in retail industry, as highlighted in the peer-reviewed journals.

 

RFID Benefits	Frequency	Percentage	Rating Average (Delphi)
Improved levels of customer service	15	12.93%	3.75
Reduced cases of stock outs	11	9.48%	2.75
Increased sales	4	3.45%	1
Reduced inventory shrinkage	9	7.76%	2.25
Minimized overall operation cost	3	2.59%	0.75
Improved management of assets	8	6.90%	2
Improved tracking ability	7	6.03%	1.75
Real-time visibility of inventory	9	7.76%	2.25
Improved accuracy of data	12	10.34%	3
Enhanced on-shelf availability	8	6.90%	2
Speed, efficiency, and accuracy at POS	6	5.17%	1.5
Monitor overall worker productivity	2	1.72%	0.5
Improved collaboration	1	0.86%	0.25
Improved inventory and order visibility	9	7.76%	2.25
Improved recall/return management	6	5.17%	1.5
Business analytics and intelligence	3	2.59%	0.75
Competitive advantage and strategic edge	3	2.59%	0.75
Total	116

 

Table 1: Benefits of RFID in Retail

In line with the Delphi study, experts stipulated that reduces cases of stock out, improved accuracy of data, reduced inventory shrinkage, real-time visibility, and reduced cases of reduced sales are the leading benefits that come alongside with the adoption of RFID technology in the retail industry. According to Derick et al. (2003), these potential RFID benefits have a transformational, automation, and information effects once developed and deployed in an organization.

Value of RFID Benefits in Retail	Average Rating
Automation	4.1
Transformational	4.6
Informational	3.9

Table 2: The Dimensional Value of RFID in Retail

A factor analysis of the benefits of RFID benefits indicated that the potential RFID benefits comprise of improved management of inventory, improved security, supplier coordination, enhanced operational efficiency, and improved inventory visibility. These benefits are further broken down to other benefits including increased sales, business intelligence, reduced shrinkage of inventory, reduced cases of shoplifting, improved accuracy of the data, improved collaboration, improved tracking of inventory, reduced cases of stock outs, etc. This is well enumerated in Table 3.

 

RFID benefits & related Factors	Probability	Total Value
Improved Management of Inventory
· Reduced cases of stock outs	0.645
· Increased sales	0.833
· Reduced inventory	0.306
· Business intelligence	0.888
· Reduced missing sales	0.592	3.264
Improved supplier & customer coordination
· Tracking inventory in transit	0. 8968
· Improved recall/return management	0.710
· Tracking orders	0.679
· Monitor productivity of workers	0.441	1.829
Improved Visibility
· Real-time visibility of inventory	0.935
· Improved accuracy of data	0.674
· Improved management of assets	0.894
· Improved visibility of order	0.630	3.133
Improved Security
· Reduced inventory shrinkage	0.875
· Reduced cases of shoplifting	0.703	1.578
Improved Efficiency in Operations
· Reduced cost of labor	0.358
· Improved productivity of labor	0.684
· Competitive advantage	0.721
· Increased sales	0.389
· Speed, efficiency, and accuracy of processes	0.847
· Reduced operations costs	0.573	3.571

 

Table 3: RFID benefits Factor Analysis

 

Although RFID technology has so many benefits in the retail stores, the peer-reviewed journals also indicated that the RFID technology also has some challenges. For instance, 74 of the peer-reviewed articles examined indicated that challenges of RFID technology include cost and privacy issues, data integration and readability challenges, lack of support from the top management, employee resistance, multiple frequencies at the same time, and lack of expertise to maintain and upgrade RFID technology.

Challenges	Frequency	Average Rating
High Cost	20	27.03%
Privacy issues	12	16.22%
Readability	8	10.81%
Lack of IT expertise	11	14.86%
Resistance	4	5.41%
Lack of appropriate standards	6	8.11%
Multiple frequencies	13	17.57%
Total	74	Average Rating

Table 4: Challenges of RFID Technology

74