Academic journal article Journal of Theoretical and Applied Electronic Commerce Research

RFID-Enabled Business Process Intelligence in Retail Stores: A Case Report

Academic journal article Journal of Theoretical and Applied Electronic Commerce Research

RFID-Enabled Business Process Intelligence in Retail Stores: A Case Report

Article excerpt


The growing interest in Radio Frequency Identification (RFID) technology in recent years has sparked an intensive debate on the benefits to be expected. With the growth of RFID implementations in size and scope comes a shift away from infrastructural aspects to the question of how to draw value from the large amounts of collected data. However, the necessary procedures for the handling of massive RFID data sets are still an under-researched issue. Against this background, the study presents results from a real-world trial conducted by a large apparel retailer. The objective of the trial was to explore the opportunities for generating novel performance indicators and reports on the reality of store processes and customer behavior on the sales floor. We give an overview of the algorithms used for RFID data processing and the interpretation of the resulting insights from a practitioner's point of view. The case example thus provides an overview of the potential of RFID as a powerful tool for assortment optimization, customer research, store layout design, and other management tasks in retail.

Keywords: RFID, Apparel retail, Store logistics, Data management, Business analytics

1 Introduction

Automatic identification technologies have become omnipresent in retail operations [29], [47], It was particularly the introduction of barcodes almost 40 years ago that fundamentally changed the industry and laid the foundation for many of today's supply chain management concepts [32], However, the barcode's success was not assured from the outset. Among the obstacles to implementation in the 1970s were consumer resistance to the elimination of item price marking, high scanner equipment costs, and the manufacturers' initial reluctance to redesign product labels [10], [24], On the pro side, the economic rationale of barcode implementation relied on only three benefit types: (i) time and cost savings by speeding up the check-out process; (ii) the reduction of checker errors; and (iii) the elimination of paper price labels.

Unfortunately though, it turned out that these hard benefits alone were not sufficient to drive rapid diffusion. However, soft benefits (e.g. improvements from more accurate inventory data, real-time tracking of sales) were to a large extent regarded as speculative because of the required changes in planning processes and the lack of data processing capacities [9], [22], It was not until the end of the 1980s that companies worldwide recognized the economic potential of the data sets collected by means of the barcode. Barcode data eventually became the enabler of several novel supply chain innovations, such as direct store delivery, continuous replenishment, and vendor-managed inventories. As we know today, the value that can be drawn from the billions of barcode scans every day exceeds the initial expectations by orders of magnitude.

1.1 Motivation

In our times, history seems to repeat itself anew in the emergence of wireless sensors, particularly in the form of RFID technology. Driven by the vision of the internet of things, the growing interest in the use of RFID on the part of the retail industry in recent years has sparked an intensive debate in academia and practice on the benefits to be expected [34], [37], Moreover, in Gartner's Hype-cycle 2009, RFID was among the 5 technologies, which was attributed to gain most value for organizations in the following years [17]. A positive influence on the RFID adoption process is exerted by top management support and forces within supply chain partners. Therefore, Retail giants in Europe and the U.S. have taken many efforts to convince their suppliers of the positive impact of RFID on supply chain performance. Notwithstanding these efforts, the overall adoption rate in retail in the early years was still rather slow [41 ]. A major reason for this phenomenon may be found in the narrow focus of prior RFID trials on applications, where RFID merely serves to save cost by automating object identification tasks. …

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