This week we turn our attention to the technologies of the future, including the resurgence of RFID. The term "resurgence" is appropriate because, in the words of Barb Darrow at GigaOm, "RFID was one of those next-big things in IT that didn’t really pan out because the readers were expensive and the read-rate failure was high. (The reader had to be really close to the tag). But with stakes getting higher, that calculus might change as retailers revisit the idea of tagging merchandise to enable easy payment and inventory monitoring."
There is a fruitful intersection point between these two topics. In an analysis by RFID and GPS company ThingMagic, RFID might bring to retail the kind of agile real-time analysis of customer preference and demand that has traditionally been the province of internet retailers. They write, "A key to optimizing sales and margins is making near real-time decisions about merchandising, assortments and promotions. It’s easier to do this on the web because of data available from such things as what items people are clicking on, search queries, etc. Retailers can change what gets promoted on the fly with this information."
They point to technology such as RFID-embedded clothing hangers that can allow retailers to track precisely which items are lifted off the rack, which ones are taken to the fitting room, and which of these trips result in sales and which result in abandoned merchandise. (See image)
|RFID-enabled hangers allow retailers to track customer interaction with products (ubergizmo.com)
These technologies can be combined dynamically with mobile apps designed to assist shoppers. From the GigaOm report: "A consumer could use her smartphone to find a leaf blower or washing machine at the store, scan it with the phone for payment and schlep it to the car — all without waiting in a checkout line (or an unpleasant encounter with store security)."
It is easy to imagine the intersection between these two data streams. Retailers could perform real-time, dynamic hypothesis testing on alternative promotions, the way Google constantly tweaks their advertising algorithms (essentially turning every user interaction into a massive training set). Retailers could, for instance, detect that a customer had lifted a certain jacket or blouse and immediately transmit an advertisement custom-tailored based on the user's Facebook "likes." The algorithm could automatically determine which pitch was most effective at turning interest into sale and roll the strategy out nationally, all without the intervention of an individual.
However, there are some real challenges associated with this otherwise utopian picture. Jeff Bertolucci at InformationWeek notes, "The benefits of RFID are real, but the technology also poses problem for organizations. For instance, many retailers that adopt RFID for inventory management must find ways to ingest, analyze, and archive huge volumes of new data." Given the potential headaches uncovered in last week's ERP readings, it is easy to imagine the frustration that might come from a retailer trying to integrate an enormous stream of RFID data into a pre-existing solution designed to track point of sale (POS) data and facilitate inventory management.
 Darrow, Barb. "Big Data is a big deal - and getting bigger - for retailers." GigaOm. http://gigaom.com/2011/11/23/big-data-is-a-big-deal-and-getting-bigger-for-retailers/
 Lynch, Ken. "RFID, Big Data, and retail." ThingMagic. http://rfid.thingmagic.com/rfid-blog/bid/80385/RFID-Big-Data-and-Retail
 Bertolucci, Jeff. "RFID needs Big Data Tools." InformationWeek. http://www.informationweek.com/big-data/news/big-data-analytics/rfid-needs-big-data-tools/240007140