Process automation has increasingly become the norm across industries and the retail industry is no different. Over the years, RFID traction in retail witnessed an evident shift from tagging cases and pallets to tagging individual items. Recently, growing significance of trends such as Omni-channel retailing and Internet of Things (IoT) has been a game changer in driving retailers away from the concept of brick and mortar stores to online shopping.

Amazon GO

That said, introduction of Amazon GO provided a glimpse into the future of retailing and garnered significant buzz across the industry. The store is expected to offer customers the freedom from queuing at check-outs and aptly named as ‘Just Walk Out Technology’. Amazon GO is expected to leverage data from sensor fusion combined with computer vision and deep learning techniques. Although unclear if RFID is used as a part of the solution, RFID and sensor vendors are expected to follow developments in this space closely.

Exponential increase in smart devices and their applications has resulted in the dawn of connected environment. Smart devices merge the physical and the online worlds augmenting the capability of real-time data exchange about parameters such as product info, customer behaviour pattern, and store analytics. Amazon GO is an example of how IoT is redefining the way business is being done across different verticals. Despite offering a futuristic solution, several questions arise on how this technology will be effective in preventing any customer inconvenience.

Amazon’s Acquisition of Whole Foods, Inc.

Furthermore, Amazon’s latest and by far its largest bid to date to acquire of Whole Foods Market IP. L.P. Market, Inc. has sent ripples across the retailing industry. The online retailing giant took a major step toward brick and mortar retailing, therein challenging existing participants such as Kroger, Walmart, and Costco. Groceries were never Amazon’s strong market but the potential acquisition of Whole Foods Market IP. L.P. Market, Inc. will considerably enhance its position in this market. Amazon’s strategic intent behind the potential acquisition is targeted at leveraging the best of both worlds (online and brick & mortar). In a market that operates on razor thin margins, Amazon can sell fresh produce online or use the Whole Food stores to sell its other products.

The acquisition will present opportunities for RFID vendors across all Whole Food stores and beyond. RFID has gradually revolutionised business processes in the retail industry. Enhanced inventory management and asset tracking have been the key parameters for higher RFID adoption in the retail industry. Other benefits include improved operational efficiency, reduced labour, information accuracy, greater sales, and improved customer service. Despite a positive outlook for the RFID adoption, several challenges exist with privacy being the biggest. Since the introduction of this technology, privacy has been an ongoing issue with customers concerned about the loss of privacy, data, and identity. However, recent trends augur well for RFID adoption in retail as several projects have been implemented globally. Despite deployments and technological improvements, certain user groups indulge in protesting against RFID usage.

Organizations such as RAIN RFID enable businesses and consumers to identify, locate, authenticate, and engage items in our everyday world. RAIN RFID, an industry alliance formed by The Association for Automatic Identification and Mobility, Smartrac, Impinj, Google, and Intel was launched to promote the growth of UHF technology. With Amazon being a member of RAIN RFID, the acquisition bid had a positive impact on Impinj’s stock.

Omni-channel Retailing – A Game Changer

Omni-channel retailing is a game changer with Amazon expected to sell the produce through both physical and online channels. Amazon will position each of Whole Food’s 460 stores as a distribution centre to cater to the demands of its online customers. As smart shopping gains prominence, retailers lay emphasis on customer behaviour patterns with in-store marketers focused on creating relationships with consumers by delivering an enhanced brand experience. This is expected to open opportunities for targeted marketing using RFID and allied technologies. Compared to traditional, in-store communications, digital signs can both increase the sales and save costs due to superior shopper engagement.

Furthermore, Omni-channel retailing, item-level tagging, and source-tagging bring the challenge of managing data and analysing them effectively to offer knowledge to retailers. RFID implementations globally will drive data traffic to reach gargantuan proportions. Currently, large retailers have private clouds which enable them to monitor their assets and inventory, and offer customers the wholesome shopping experience. A gradual shift from private clouds to public clouds is expected by 2020, which will enable small and medium-sized companies to leverage cloud services to their advantage. Additionally, the increasing online shopping is expected to augment interests in RFID as a service (RaaS). Benefits of using the software as a service to address the demand specifically during peak seasons will augment the growth of RaaS.

Conclusion

The Internet of Things (IoT) is here to stay. Changing business landscapes are increasingly becoming common with new value chain partnerships and product innovations. Although IoT has high potential to facilitate smart retail, it also faces major challenges in achieving the same. Despite trends indicating a shift from traditional physical stores to online retailing, Amazon’s recent bid to acquire Whole Foods Market IP L.P. Market, Inc. proves otherwise. Although Amazon has specified that the Amazon GO concept will not be used in the Whole Food stores, the potential acquisition is expected to provide growth opportunities.

About Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

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