RFID Faces Adoption Challenges in Retail In-store Environments

Spending on RFID systems for retail POS forecast at nearly $400 million by 2010, but technical, supply chain and cultural issues abound, VDC reports

Global Shipments of RFID Systems for the Retail POS Vertical Segmented by Product Category (Millions of Dollars)



  • Accurate and efficient inventory control;

  • Consequent cost reductions related to better inventory management;

    Optimal stock levels based on real-time customer activity/demand;
    Reduction of out-of-stocks;
    Lower warehousing costs via automated processes and improved tracking efficiencies;

  • Improved margins associated with the cost reductions cited above.

  • Software coding and proper systems integration: Conversion code needs to be written to convert all existing databases so that a retailer can cart EPC information. Managing the enormous volumes of data generated by RFID systems is expected to be a complex task, requiring significant retailer attention;

  • Unsynchronized adoption across the supply chain: Retailers are concerned that their IT suppliers and distributors may not be quick to implement RFID. Retailers and manufacturers need to collaborate on RFID efforts to receive the full benefit, including determining how best to place/position RFID transponders onto products or into packages in the most cost-effective and efficient way;

  • Extensive training requirements of new systems: Retail personnel must be trained on how to use the new systems and to learn new job functions. In addition, some retailers may need to renegotiate labor contracts due to collective bargaining agreements regarding work rules for employees; and;

  • Cost of technology replacement: In addition to the costs of system components and business process changes, there is also the potential expense of replacing existing scanners in stores with new devices that are both bar code magnetic stripe and RFID enabled. With retailers supporting more and more checkout lanes across hundreds of stores, the number of devices that will potentially be replaced/upgraded is significant.


Additional Articles of Interest

radio frequency identification initiative Recognizing Real RFID Adoption Potential Supply & Demand Chain Executive

Wal-Mart use of RFID Wal-Mart Achieving Improved On-shelf Availability with RFID, Study Finds