This is a radio-frequency identification chip — better known as an RFID chip — and you can expect to find a great deal more of them in stores this year as retailers increasingly bet the technology can be a critical part of solving their most vexing problems.
This week at the National Retail Federation’s Big Show, vendors here showed off some of the ways RFID is being used to make in-store shopping more experiential and to execute behind-the-scenes changes that might boost sales.
Impinj, which shipped 3 billion of these chips last year, demonstrated how its technology is being used at trendy apparel chain G-Star Raw. At G-Star, when a shopper approaches a large TV screen with a piece of RFID-equipped clothing in hand, the screen will instantly showcase more information about that product and recommendations for how to build a complete outfit with it. Kenneth Cole, L.L. Bean and New Balance are also testing variations of this technology.
Adobe and Razorfish displayed a similar use case, in which shoppers in a shoe department could place a chip-equipped shoe on an RFID reader, and then could learn more about the product on an iPad and notify a sales associate that they were looking for it in a certain size.
Not all uses of RFID technology will be immediately noticeable as you wander a store.
With RFID chips — which don’t use battery or electricity and cost just pennies to make — every item in a store can have a unique identifier. Thus, any specific item can be easily located by an RFID reader, a companion technology that communicates with the chip.
In this way, RFID can make it much easier for a store employee to quickly find certain products and, for example, help a shopper score the bootcut jeans he couldn’t find in his size because the last pair had been stuffed on the wrong rack.
Levi’s has been an early adopter of this technology in its stores, and it’s not hard to see why: Denim jeans not only come with length and waist measurements, but different styles of jeans look quite similar when they’re folded and stacked on a shelf. So, if a customer comes in looking for the very last pair of dark-wash 34×32 jeans, it can be a bit like finding a needle in a haystack. At Intel’s booth at the expo, Levi’s showed off how RFID has allowed clerks to quickly locate out-of-place items or replenish out-of-stock ones.
This more detailed record of inventory can perhaps be even more powerful in another way: It could help retailers do a better job with two relatively new offerings they’re desperate to get right as shopping moves online. It could play a role in fulfillment of “click-and-collect” orders, in which you buy something online and pick it up at a nearby store, as well as fulfillment of “ship from store” orders, in which an online order is shipped to your home from a nearby store, theoretically ensuring it gets to you faster and cheaper.
Right now, these programs aren’t always working so well, in large part because retailers don’t have an especially real-time or accurate view of their inventory. They might not know that the last size 8 sheath dress that was promised to a click-and-collect customer had been snapped up 20 minutes earlier by an in-store shopper. That online order then has to be cancelled. And store employees might struggle to pick and pack digital orders if they can’t easily find an item within the store. RFID, vendors contend, can play a big role in solving those problems.
Retailers such as Kohl’s and Target have begun to implement RFID widely in their vast store fleets, even though RFID has been around for years. Companies developing the technology and related products say it is now becoming more mainstream for a variety of reasons.
Chris Diorio, chief executive of Impinj, said the size of the chips has come down dramatically, meaning it’s easier to discreetly add it to products.
Anurag Nagpal, director of RFID solutions at software-maker Checkpoint Systems, said recent innovation has made it more feasible to use RFID on products beyond clothing. (In earlier days, Nagpal said, RFID tags did not work well on metal or packages containing liquids.)
But the biggest tailwind to adoption may be a change in mindset for retailers: They now see the technology as not only an inventory management tool, but a way to beef up their so-called “omnichannel” strategy, or their approach to blending in-store and digital retailing.
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