Over a decade ago, Walmart was set to pull the retail world into the 21st century using brand new RFID technology. In 2006, they asked their suppliers to add RFID chips to all the goods they sent out, to help Walmart keep more accurate track of their stock. But suppliers thought RFID tagging their stock was too expensive, and couldn’t see the long term benefit. They refused to meet Walmart’s demands, and one year later this ambitious project was cancelled.

In 2016, 50% of the world’s top one hundred retailers are working on RFID integration for their stores, and no amount of supplier concern can stop them. So what caused this turnaround, and why is the technology making a comeback?

Short for ‘radio-frequency identification’, RFID is a tracking system in which small tags emit distinct frequencies to be read by remote RFID scanners. These scanners help store owners track stock levels and item locations. In the age of Amazon, retailers need all the help they can get to compete with their online-only rivals, and RFID can help them in a big way.

RFID is keeping stores stocked-up

For customers who travel to a retail store, there is nothing more infuriating than finding an ‘Out of Stock’ sign on the shelf. The instant gratification of taking an item home is one of the big advantages of ‘real world’ shopping. Without the risk of the dreaded ‘Out of Stock’ notice being properly mitigated, customers might turn to online shopping forever. That’s where RFID comes in. When items are tagged with RFID emitters, store owners know exactly what is on the shelves or in the stockroom at any given time. This means the shelves can stay full, and the customers can stay happy.

Though Walmart’s original plan was to use RFID solely in the stockroom, its in-store application has made the technology indispensable to retailers. As well as telling store owners where items are, RFID tags communicate information about the items, such as colour and size. Naturally, this is extremely useful in clothing sales.

Tesco started to tag its F&F clothing range with RFID emitters in 2013. Since then, they have reduced out of stock levels by 95%, and shortened stock-checking times by 7%. RFID helps Tesco make sure items of clothing are fully stocked in every size and colour, without making staff painstakingly check the label in the back of every t-shirt.

RFID is changing the shopping experience

We know RFID can get products onto shelves, but can it get customers into stores? It could, thanks to new experiential features that RFID makes possible. Burberry’s flagship stores use RFID technology to enhance the fitting room experience. When a customer tries on an item of clothing, an RFID scanner in the mirror activates a video about the making of the garment, and its journey on the catwalk.

UK clothing brand Made.com uses RFID in its showrooms to allow customers to scan items and buy them online as they see them. This capability also works backwards: RFID can help retailers offer the ‘buy-online, pick-up-in-store’ option, giving customers the best of the online and offline worlds, and chipping away at the competition.

RFID can also help retailers with their store layout and organisation. By tracking the movements, habits and payment methods of customers, it can give stores insights into consumer behaviour. For example, RFID tracking can tell retailers if certain items are always bought together, thus suggesting they should be placed together on display. It could also determine which items are frequently bought at self-service checkouts, giving insight into which items should be placed next to them.

When sceptical suppliers declined Walmart’s requests back in the mid-2000s, they did not see the benefits RFID would have in the long run. Now it has a proven success rate and thousands of retailers – including Walmart themselves – are striving to use it.