Is Blockchain the new RFID?

RFID is widely implemented tech by retailers, but when combined with blockchain it has great potential to maintain traceability all over the supply chain management, reducing the menial work.

blockchain network

The majority of retailers see the technology as a clear path to more accurate inventory counts, but some innovative retailers are using RFID in more unique ways for more than simple inventory management.

By providing item-level connectivity, RFID will be instrumental to further omnichannel advancements. RFID along with sensors, cameras has a lot of potentials to evolve stores. The use case of RFID along with blockchain technology is yet to be implemented everywhere.

Benefits of RFID in Retail

Inventory Tracking

Inventory tracking is the most well-understood and widely used RFID application in retail. It minimizes out-of-stock situations. Accurate product-location information can lower the cost and complexity of managing inventory, speed pick-ups, and packaging and delivery can boost customer satisfaction. Therefore, tracking should be the starting point for many retailers, with the important benefit of unit-level tagging that lays the foundation for other use cases.

This is especially relevant for retailers with a robust omnichannel strategy, like lululemon. Lululemon Athletica uses product-location information to deliver a flexible model. The retailer uses RFID tags throughout its network of nearly 500 stores and boasts a resulting 98 percent inventory accuracy and a payback period of one year or less. During the COVID-19 pandemic, lululemon used this location information to manage inventory levels as customer demands shifted.

Store Operations

The retailer is also testing several RFID-based checkout solutions. For instance, its “scan-and-go” solution in Europe allows shoppers to scan and pay for items with their smartphones, automatically disabling RFID tags and avoiding checkout lines altogether. In an era of social distancing, helping customers avoid close contact with checkout staff could be a competitive advantage.

RFID can reduce the queue time by 90% or even fully eliminate it. RFID readers have a track of the customer's bag, each item does not need to be scanned individually. Since RFID readers can automatically read everything that goes in and out of the store, they can even automatically charge customers for their purchases when they walk out. Amazon Go uses the exact same “Just Walk Out” technology.

Improved Security

RFID tags work well to prevent a wide variety of shoplifting scenarios. Imagine a shoplifter who takes several items and tries to slip out of an exit. RFID readers at the door will detect the RFID tags on the stolen items and trigger alarms to notify employees. In simpler terms, RFID has reduced shop-lifting by more than 75%. Once your RFID system is up and running, there is no additional cost to maintaining the security of every item in your inventory.

Customer Experience

RFID has a lot more capabilities than inventory tracking and store operations. More advancement can attract customers looking for dynamic experiences, drive revenue, and yield valuable behavioral insights. RFID-enabled activation can take a variety of forms, smart fitting rooms being one of them. Smart fitting rooms make automated suggestions as per customer’s selection, available sizes, colors, styling a garment, and personal recommendations.

Chanel’s collaboration with Farfetch uses RFID technology for the same. The high-tech, RFID-enabled fitting rooms give users a wonderful digital journey of new styles, product details, and lifestyle. The retailers get the advantage of gathering information, which can be used for proper planning and an increase in conversion rates.

Future possibilities

RFID for Blockchain

RFID in conjunction with blockchain enables the system to integrate different participants in the supply chain network including suppliers, the customers, stakeholders, regulatory agencies hence providing high degrees of accuracy.

The blockchain network is capable of sharing serialized item-level data encoded in RFID tags between the participants.

“By exploring the intersection of RFID and blockchain technology, we’ve taken an important step in our mission to help rid the retail supply chain of costly errors and inefficiencies caused by outdated processes and legacy systems.”

-Justin Patton, director, the Auburn University RFID Lab

As the industry demands greater automation and accuracy of data, the industry is trending towards greater adoption with IoT and automated data collection.

Enabling Technology

Product tagging (RFID, NFC-embedded ID chips), sensors, scanners along with an interface of blockchain in logistics, invoice systems, traceability, order management are expected to link together for better access. The base-of-the-pyramid producers should have a good infrastructure to connect directly with the consumers for end-to-end supply chain traceability.

traditional system vs blockchain enabled system in food supply chain

Throughout the supply chain, a moderate technical effort is required to digitize and introduce tagging technology (such as RFID), build mobile applications for low-tech actors, and integrate existing platforms with a blockchain solution. With the scan of an RFID tag, data on the product can immediately be recorded at that location and time. Other uses of traceability technology include providing specific data on the product to add to the blockchain.

For example, the IBM Food Trust™ is a blockchain-based suite of solutions for creating smarter, safe, and more sustainable food systems. Accessible by participants across the food supply, from producers and processors to wholesalers, distributors, manufacturers, and retailers, the Food Trust is a permitted, permanent and shared record of food system data. The solution is designed to eliminate bottlenecks in the supply chain while helping to ensure food safety and regulatory compliance and enhancing brand reputations for safety and quality.

Automation is a strategic imperative, RFID with blockchain has the capability of automation in the full supply chain, including the security aspect. The technology unlocks a new level of customer experience and unprecedented employee flexibility.


McKinsey: RFID in retail



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-Chief Innovation Officer, BLVCK PiXEL

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