The day of the RFIDs
What is Radio Frequency IDentification (RFID)? Why should retailers care? What do New Zealand consumers think about it? And is RFID technology ready to change the way some Kiwi businesses operate?
RFID simply refers to technologies that use radio waves to identify objects. Retailers use such technology to identify inventory and enhance their consumer services. In terms of the clothing retail industry, retailers would attach an RFID tag, which is comprised of a minute, inexpensive computer chip with a miniature antenna, to a garment in order to reap such benefits (more in-depth explanations about RFID technology and how it can benefit retailers can be found here and here).
What NZ consumers thought of RFID was the primary focus of my recent study at Victoria University of Wellington. In collaboration with my supervisors, Jayne Krisjanous and Professor Peter Thirkell, we researched New Zealand consumer’s awareness and knowledge of RFID technology, how they heard about the technology, their attitude towards it and, most importantly, intention to purchase products that have an RFID tag attached to it. The product researched in this study was clothing, as the clothing retail sector is predicted to be the largest growth area of RFID adoption.
It’s estimated the global clothing industry spent $44.8m on RFID solutions in 2009 and this is slated to triple to $125m in 2014. Clothing retailers such as Marks & Spencer, Prada and American Apparel have already successfully implemented RFID systems.
NZ consumers awareness of RFID
Awareness was measured by asking if respondents had heard of RFID. 33 percent of consumers had heard of RFID technology. The majority of consumers who were aware of RFID only have some to very little knowledge about the technology.
Where did they hear about RFID?
The majority of consumers had heard about the technology through print media, such a newspapers and magazines.
Information about RFID given to consumers
The study provided information, which had been heavily cited in RFID literature, including a comprehensive description of RFID technology itself and applications/issues that arise from its use in the clothing retail setting. This was in order to provide a well-balanced representation of applications/issues that consumers would likely be confronted with in a clothing retail store that has implemented an RFID system.
The applications of RFID in the clothing retail setting outlined were:
- The RFID tag enabling consumers to access real-time and accurate information about what colours, styles and sizes are available in the store at a given time.
- The RFID tag acting as a warranty or proof of purchase (as the relevant information can be gathered from the stores RFID system reading the tag), which reduces the need for receipts.
- Privacy concerns, surrounding the use of RFID in the clothing retail setting, were also conveyed. This addressed issues such as consumers being tracked and traced if the RFID tag is not deactivated on leaving a store.
Consumer Attitudes
Having read about the technology, Kiwi consumer attitudes appeared relaxed towards the use of products (clothing) enabled with an RFID tag. Attitudes largely varied between ambivalence and a modest positive attitude.
Intention to Buy
But the intention to buy clothing with an RFID tag attached to it is not quite as relaxed as their attitude. The analysis showed the majority of New Zealander’s (52 percent) would ‘probably’ or ‘definitely’ buy clothing that has an RFID tag attached to it. Only four percent would ‘definitely not’ purchase.
Clearly, there are benefits to be gained by using RFID technology in retail, both for the retailer and the consumers. So what’s preventing adoption?
For more information about RFID and this study’s findings please email brooke.anderson@gs1nz.org.
Angeline
February 8, 2010
Rica Lewis, leading jeans retailer in Europe, has recently announced its RFID Deployment. (see http://www.tagsysrfid.com/Company/News-events/Tuesday-26-January-2010-TAGSYS-AND-RICA-LEWIS-DEPLOY-RFID-SOLUTION-AT-MAJOR-EUROPEAN-RETAILERS)
The key differentiator in this development is that the majority of the RFID deployments in the Fashion and Apparel industry have been in what we call a “controlled loop” environment. This means that the brand owns both the distribution and the retail environment. Rica Lewis is the 1st implementation to our knowledge which has the brand using RFID data on the floor of the major retailers. It is our belief that this is the way that RFID will be deployed on a large scale at the major retailers. Once the brands start utilizing RFID for their own benefit (logistics, inventory, replenishment, etc…), the retailers will also be able to take advantage of the technology for applications such as Point-of-Sale and Security. We believe that in order to get traction at the retailers the brands need to find ROI in the technology, Rica Lewis is a great example of that.
Reik Baird published an article outlining his analysis of the Rica Lewis ROI –
http://www.rfid-monthly.com/2609/rfid-rica-lewis-compelling/
As a conclusion he notes "We view adding nearly incremental profit of nearly three-fold of incremental cost as a compelling ROI."
Duncan Stuart
February 9, 2010
Brooke. I really don't quite understand why it was necessary to gauge public awareness of RFID. And you've given us no idea of your sample size or sample universe either – so we have no way, in any case, of assessing the validity of the survey.
In terms of conclusions; the last chart is the give-away: at the end of the exercise your respondents overwhelmingly gave a "middling score" regarding intention to buy. I'd suggest that, all things considered, they don't particularly care about RFID. It doesn't set shoppers on fire.
However retailers and manufacturers should care very much. As long ago as 2003 WalMart mandated that within 5 years the majority percent of all its merchandise would be freighted and tagged with RFID technology. This is one of the cornerstones of their JIT management and slimmer margins. In some ways the potential of the technology – purely in terms of gaining information about the marketplace – is massively unrealised. RFID gives us real time feedback on actual behaviours – as such the information it delivers is more predictive and powerful than surveys based around attitudes and/or crude demographics.
Gary Hartley
February 9, 2010
Clearly, from a marketing perspective, understanding buyer behaviour is crucial. In recent years the migration of RFID technologies at the consumer interface has met with severe agression from some consumer groups and from my perspective, gaining some insight into
Gary Hartley
February 9, 2010
…….. NZ consumer attitute is useful. I would also think that as part of a university honours thesis, the reasearch would be considered statistically robust.