Can retail really be both smart and sustainable?
Sustainability is no longer a buzzword—it's a fundamental expectation in contemporary retail. Whether from eco-aware consumers or ESG-driven investors, all stakeholders are driving towards a greener, more transparent industry. But how can technology drive this without sabotaging efficiency?
The solution is RFID.
Radio Frequency Identification (RFID), which was earlier used to track inventory, is now redefining the way retail businesses operate with more efficient and more environmentally friendly practices. It eliminates waste, accelerates visibility, and enables companies to move from linear to circular models of retailing while improving operations.
RFID and Sustainability are now a top strategic priority for the retail sector. Various surveys have highlighted that the majority of retailers are now adopting RFID technology for obvious reasons including evolving customer expectations, rising environmental compliance, and business commitment to ESG principles. In north Americas alone, RFID adoption is at 93% with 47% of surveyed retail business having full adoption while 37% still implementing the same, as per a report by Accenture in 2020.
As the retail business moves toward greener practices, RFID technology is playing a vital role in facilitating this transition.
What is RFID and How Does It Work in Retail?
RFID offers real-time, item-level visibility across the supply chain, allowing retailers to maximize their inventory, enhance traceability, reduce waste, and facilitate circular economy practices.
Radio Frequency Identification (RFID) is a wireless, automatic identification and data capture technology that utilizes radio frequency signals to automatically identify and track objects tagged with RFID labels. The tag itself has electronically stored data in the form of EPC (Electronic Product Code) and it doesn't need line-of-sight to function, unlike barcodes.
RFID is used mostly in retailing for inventory precision and to improve supply chain effectiveness and operating effectiveness. Each product has an RFID tag, which carries a unique code with the product. As those products pass through the supply chain process (manufacturing, distribution, retail floor), RFID readers read and collect information in real-time, providing end-to-end visibility.
How is RFID more beneficial than traditional tracking procedures?
Retailers who chose to opt for RFID benefit in various ways that barcodes simply cannot offer so far:
1.Immediate inventory visibility with an estimated 98% accuracy.
2. Faster stocktaking rates and reduced labor expense.
3. Automated replenishment based on real-time demand.
4. Increased item-level traceability to aid operational and sustainability objectives.
RFID has traditionally been seen as being used principally as a logistics or inventory management tool; however, as RFID and sustainability is built into retail strategy, it increasingly has an ever-wider definition as it is now looked at as a viable solution to reduce retail waste, enhance product lifecycle management and reduce environmental compliance hurdles.
The Waste Dilemma in Retail, Reverse Logistics: RFID's Role in Resolving It
The waste dilemma in retail is a reality that is pricey and enduring. The inefficiencies of excess production, excess stock, and poor returns result in huge contributing sums of money loss and environmental degradation. RFID technology aims to solve this issue by ensuring an effective reverse logistics strategy for retailers in food and apparel sector.
It is estimated that annually billions of dollars' worth of merchandise is written off, and a significant percentage of the merchandise ends up in landfills.
Even returns in themselves have a huge environmental impact. Not having a proper reverse logistics strategy in place leads to inaccurate inventory and wastage. In fashion retailing, for example, much of the returned product will never re-enter stock but will be thrown away or destroyed. Returns occur as a result of sorting failures or damaged products during reverse logistics, with no capacity to reintegrate back into the retail supply chain.
Not surprisingly, when these kinds of waste practices are performed, they carry significant carbon costs and environmental losses and undermine retail's sustainability initiatives.
RFID is a data-based solution to this retail dilemma, in that it offers:
1.Reliable inventory insight: Real-time visibility of stock ensures dependable forecasting of stock and minimizes shrinkage.
2. Effective returns: RFID-wrapped products can be quickly scanned, retrieved, and returned to the shelving, which practices retail waste reduction.
3. Prevention of Shrink: RFID and sustainability offer timely tracing of products that cut losses due to damage, theft, and paper errors.
Furthermore, RFID offers robust data accessible to retailers that enables profound insight into product movement, their customers, and shelf conditions. Retailers have enhanced information about sustainable purchases from production through markdowns and numerous other practices and methods with appropriate analytic capabilities.
Smart Sustainability: From Linear Retail to Circular Retail
Traditional retail has traditionally relied on a linear supply chain that includes production, selling, consuming, and throwing away. However, pronounced concerns about the environment and wasting precious resources forced stakeholders of all kinds, including retailers, brands, consumers, and lawmakers, to begin the shift to a circular economy with a focus on designing, tracking, and managing products for maximum usage, reuse, and sustainable end-of-life.
RFID technology in retail is essential to this transition and provides item-level data to inspire smart retailing through circular options:
1.Tracking product's life cycle: RFID tags allow data to be spun off related to product materials, places of manufacturing origin as well as care instructions. All knowledge becomes paramount when products go through the resale repair, or recycling processes.
RFID technology can help streamline returns for item take-back programs. The retailer now no longer has to put the product back on the shelf and can quickly ascertain if the product is available for resale, donation, or recycling.
2. Promoting sustainable design: Brands can also measure longevity and their customers' usage of a product through RFID data analytics. This knowledge provides a better basis for constructing more circular, durable, adaptable, and recyclable products.
Enhancing ESG Performance and Supply Chain Disclosure
As Environmental, Social, and Governance (ESG) metrics become increasingly important measurement tools for investors, regulators, and customers, retailers will be under pressure to deliver transparent, auditable insight into their activities, such as sourcing, working conditions, emissions, and waste.
RFID technology in retail offers a scalable, reliable platform for retailers to meet ESG goals, specifically through greater visibility and accountability along the supply chain.
How RFID Supports ESG Compliance?
1.Environment: RFID and sustainability ensure precise tracking of product flow, eliminating overproduction, excess inventory, and waste. As part of its role in retail waste reduction management, RFID assists recycling efforts by labelling materials and product components like MCAT (Mechanical Component of Added Technology), which facilitates easy sorting and efficient processing.
2. Social: Through enabling end-to-end traceability of a product, RFID facilitates the verification of goods that are sourced ethically, produced in decent labor conditions, and certified by preventing counterfeit or unauthorized entry into the supply chain to deliver an appropriately reported product guarantee and guarantee against reputational risk.
3. Governance: RFID technology in retail can supply auditable and consistent sources of data to use for sustainability reporting and adhere to laws like the EU Green Deal and Extended Producer Responsibility (EPR) legislations and other ESG practices.
RFID can also be incorporated into enterprise resource planning (ERP) software, blockchain applications, or into the cloud to deliver open, transparent supply-chain verification.
RFID Powers Sustainable Retail
Sustainable retail is not impossible—it is doable. Lead with Ruddersoft. RFID technology in retail is not just inventory accuracy—it excels in crafting opportunities for sustainability-minded retailers, transparency, and operational efficiency. RFID is achieving outcomes from retail waste reduction to supporting circular retail. RFID enables retailers to address the present trends inspired by ESG concerns.
At Ruddersoft, we specialize in assisting retail companies to leverage smart RFID solutions that enhance operations and meet your longer-term sustainability goals. If your interest is to enhance your supply chain, maintain traceability, or get your business ready for emerging technologies under industry 4.0, our complete suite of RFID solutions will get your business ready for the retail future.
Frequently Asked Questions on RFID and Retail Sustainability
Q1. What is RFID in retail, and how does it support sustainability?
RFID (Radio Frequency Identification) in retail tracks products and inventory in real-time. It promotes sustainability in the retail supply chain through reduced overproduction, waste disposal, and the promotion of circular retail spaces like reuse and recycling.
Q2. How does RFID support waste minimization in retail?
RFID helps reduce retail waste by offering real-time visibility into inventory, improved returns handling, avoiding shrinkage and allowing more precise, fact-based forecasting that keeps from overstocking, losing items, and discarding them.
Q3. Is RFID technology necessary for achieving ESG objectives?
Yes, RFID helps achieve ESG (environmental, social, and governance) objectives in retail through offering the transparency, ethical sourcing, visibility, traceability, and sustainability reporting needed to assure environmental compliance as well as investor assurance.
Q4. How is RFID different from barcode when it comes to sustainability?
RFID does not require line-of-site and offers real-time data across the supply chain, which barcodes are not able to. This increases efficiency, lowers labor expenses, and minimizes waste, making RFID more sustainable.
Q5. Can RFID track a product life cycle?
Yes. RFID tags are able to store and exchange item-level data such as origin, composition, and past use, facilitating reselling, reusing, recycling and sustainable end-of-life decision-making.
Q6. How can RFID enable circular retail models?
RFID allows tracking, sorting, and managing products in resale, reuse, and recycling initiatives. It facilitates circular retail models by lengthening the product life cycle and enabling take-back programs.