Last month I wrote about how RFID Has Quietly Crossed the Chasm, with products, channels and applications reaching commercial maturity. NRF's Big Show validated this trend with important developments in multiple areas.
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New Tagged Item Performance Protocol Simplifies Tag Buying and Selling
You’d be forgiven for missing the most important development in RFID, or for dozing off if you did spot it. But bear with me. On January 7th, GS1 announced the Tagged Item Performance Protocol (TIPP),1 a new approach to testing tags that simplifies life for retailers, suppliers and tag vendors, and ensures that tags will really work in the field.
It’s a simple concept: TIPP defines standard ways to test tags mounted on the specific item to be tagged, rather than the current approach, which involves scoring tags on lab fixtures meant to simulate item categories. With this announcement GS1 released documents outlining standard methods for testing and evaluation of tags under the protocol.
This approach gets retailers out of the business of selecting tags, and into the business of defining requirements in standard, abstract terms. Suppliers are then free to offer any tag that meets the requirements. This will lead to more tag choice, lower tag cost, more rapid solution development and more predictable results. TIPP enjoys broad support across retailers, tag suppliers, technology vendors, academia,2 and energetic leadership from GS1, so it should stick.
Tag Vendors Work on Building Differentiation
Developments like TIPP are a mixed bag for tag vendors. TIPP will drive adoption while reducing differentiation between tags. As a result, tag vendors are working on ways to add value and maintain differentiation. Smartrac’s Smart Cosmos is an integrated set of cloud-based services devoted mainly to accelerating RFID solution development. One of the interesting features Smart Cosmos offers is the ability to verify IP rights for a given tag, giving users confidence that their selected tag vendor is free of patent entanglements.3 One can imagine a variety of similar capabilities such as instant brand authentication in the future. Features like this will help Smartrac layer value onto the basic RFID inlay, preserving margins and share.
Vertical integration is a time-honored method for enhancing value and margins. Avery Dennison’s Retail Branding & Information Solutions operation is a textbook example of this. Avery tags are a small part of a comprehensive offering of consumables, services, hardware and software that has enabled Avery to win the largest share of the apparel retail RFID market. Avery also sells commodity inlays through channels for use in other verticals, competing with Smartrac and others. It remains to be seen if Avery will attempt to replicate its RBIS model in other verticals.
Privately held Nexgen Packaging, founded by Avery Dennison alumni, received a strategic investment from Sato Global Solutions in 2013, and the partnership seems to be thriving. Nexgen was featured in the Sato booth where the partnership demonstrated a similar offering to that of the Avery RBIS business. Nexgen offers online product design and web-based order management systems designed to meet the order turnaround requirements of fast fashion. Nexgen gets its RFID inlays from YFY/Arizon, a supplier of RFID inlays out of China that we featured in last month’s post, RFID Quietly Crosses the Chasm.
Many Roads into the Future
NRF 2015 revealed a surprising lack of consensus about what’s next for RFID after handheld4-based inventory counting, which is enjoying rapid adoption. This is a good thing as it reflects optimism about the breadth of opportunities for RFID in retail. When asked what was on deck, people we encountered at the show cited one of these:
Tyco’s TrueVue iOS App
By replacing barcode readers with RFID handhelds, retailers can improve inventory accuracy, which leads to reduced out-of-stocks and markdowns, boosting both revenue and gross margin dollars. In their booth, Tyco Retail Solutions demonstrated version 5.1 of their TrueVue software solution for this application and cited inventory accuracy of up to 99%.
Fixed infrastructure inventory management is still aspirational, though a few proof-of-concept projects have been done. We saw Impinj, Tyco, TAGSYS, Checkpoint and SECURA all demonstrate their versions at the conference. Advocates say that this use delivers real-time inventory visibility and “item awareness” or “Item intelligence” that will lead to customer service and data analytics benefits. But the efficacy and economics for basic inventory management need to be proven first.
Also relying on fixed readers, customer experience engages everyone’s imagination, and the potential seems endless. The ability to detect a customer interacting with an item opens the door to delivering enhanced services and boosting customer satisfaction and sales. Impinj, TAGSYS, and others demonstrated smart dressing room concepts that provide instant validation and suggestive selling to consumers. With permanent fabric tags from vendors such as TexTrace, automated returns would boost service while protecting the retailer from abuse. Analysis of the data stream, or “data analytics,” if you like, offers many opportunities for greater understanding of consumer behavior and optimization of merchandizing and service.
At left: TexTrace illustration of in-store inventory control.
Impinj Used their xArray Reader to Implement a Smart Dressing Room Concept
TAGSYS’s Smart Dressing Room Demo
TexTrace Fabric Tags Survive the Life of the Garment, Enabling Use Cases From Manufacture to After POS
Item level supply chain is challenging for manufacturers who tag a tiny subset of their output, but for house brands tagging a large portion of their items, it’s easier to justify. This use case further increases accuracy for the retailer and helps manufacturers and brand owners avoid shipment disputes and chargebacks. Tunnel readers from vendors such as Checkpoint are useful for encoding and verifying sealed cases. For those who already have sophisticated scan-to-case packing systems in place, the upside will be limited – they’re already achieving shipment accuracy in the high 90s.
Backroom replenishment helps store associates find items faster, boosting customer service and on-shelf inventory. For those who use RFID for inventory counting already, much of the work is already done. More importantly, it’s an important cog in the Omni-channel fulfillment mechanism.6
RFID-based EAS will be a natural – eventually. Once items are tagged, reading them at exit gates seems self-evident. But the details of a complete, standard solution remain to be worked out. A few early adopters have based a solution around the Product Status Bit found in the NXP UCode 7 chip, while other are waiting for the development of an encrypted “sold code”-based approach.
As a result, RFID-only loss prevention systems remain rare and dual EAS-RFID systems from vendors like Checkpoint and Tyco represent a more practical option. Tyco announced Zara’s deployment of their system in July, in the store. And Checkpoint followed suit with Zara’s DCs. Checkpoint updated their dual solution with new point-of-sale detachers supporting RFID and RFID-EAS under the brand name Counterpoint iD (CPiD). These systems provide the effective alarm-based deterrent while reducing theft as a source of inventory inaccuracy – if something is stolen, at least retailers know what it was.
Tyco’s Steerable Sensormatic RFID Antenna
Fixed Position Readers Enable Several Use Cases
A key product category supporting multiple of these use cases is steerable-beam, fixed-position reader systems. In addition to inventory management, this capability potentially supports backroom replenishment, customer experience and RFID-based EAS. To address this space Tyco announced their new Sensormatic RFID antenna. The antenna responds to control signals from the reader to steer the beam. To simplify deployment, readers can be connected to the network directly via POE connections, or they can be daisy-chained together.
Impinj demonstrated their previously announced xArray, which represents a different approach to the same objective. The unit combines a reader and a multi-element antenna system into a single package that can take the place of a ceiling tile. Tipping their hat to the Internet-of-Things, Impinj refers to their reader as an RFID “Gateway.” At a list price of about $3,300, the reader covers about 1,500 square feet of space.
Impinj’s xArray Reader System
Checkpoint’s booth featured their Wirama-powered Overhead 2.0 reader, which was announced in 2013, but is worth comparing to the other offerings. The Checkpoint unit is aimed at RFID-based EAS. To be effective at this application, it has been optimized to discriminate between tags passing through the exits and tags on shelves and racks near the exits.
Checkpoint Overhead 2.0 Reader
United Kingdom-headquartered retail security firm Sekura showed their overhead solution from their Scout RFID lineup at the show.
Sekura Overhead Readers
Tyco and Checkpoint also offer dual RFID-EAS readers in the traditional exit-gate configuration.
High Speed Printer Encoder Enables RFID Scale in Apparel Manufacturing
Avery Dennison ADTP1 RFID Printer-Encoder Enables High-Capacity Tag Production
Fast fashion retailers bring new designs from concept to market in as little as 2-3 weeks. This puts extreme pressure on service bureaus, which are often asked to turn around trim kits in 48 hours. Thermal printers are the workhorses of service bureaus, with “printer farms” pumping out tags and tickets with variable data on demand. But RFID clogs up the works, slowing output to about 2 inches per second and increasing the time required to produce a stack of tags by a factor of 5 or more. Though high-capacity tag personalization machines have been released by Mühlbauer and Bielomatik, these are better suited to high volume operations, not the small batch requirements of many regional service bureaus. No doubt because they feel this pain firsthand, Avery Dennison has launched its Tabletop Printer 1, or ADTP1, a new printer that prints, encodes and verifies tags at 8 inches per second.
Avery’s printer highlights a branching of market segments in this market. While the ADTP1 is optimized for high volume printer operations, many users actually require labels in low volumes on an ad hoc basis. For applications like this Zebra showed their ZDR500 printer which is optimized for medium-capacity needs and occupies a small footprint on the desk.
Zebra’s Medium-Capacity, Small Footprint, Desktop ZDR500 Printer-Encoder
Internet-of-Things Simplifies RFID Adoption
In the Motorola/Zebra booth, the Zebra team demonstrated the Zatar Internet-of-Things platform, which provides a standard framework to accelerate development solutions based on Internet-connected devices. Zatar features an “avatar” model for representing connected devices that should simplify solution development. Zebra made it clear that Zatar is not an RFID-specific solution, but as one sensor modality of the IoT, RFID is supported and RFID readers and encoders are “IoT gateways.”
Platforms like this will reduce the cost and deployment time for new RFID solutions based on supported hardware. Zatar is meant to be a generic IoT platform, meaning that it will support hardware from other than Motorola and Zebra. At the same time, most device manufacturers have or envision their own software platforms. This foreshadows an interesting competitive showdown between hardware-specific and hardware-agnostic platforms in the future.
iPad app screenshot from Zebra’s Zatar IoT Platform
NRF 2015 a Good Reason to Look Forward to NRF 2016
2015 will be a break-out year for RFID. (Stay tuned for our RFID forecast report.) Handheld inventory management, RFID’s killer app is taking off, and other applications are suddenly looking less like lab projects and more like commercially interesting investments. The maturation of RFID technology and channels and the convergence of the Internet-of-Things and data analytics means that we’re starting to see what visionaries imagined for RFID 10 years ago. I look forward to exploring the Big Show a year from now to see what will have been accomplished in 2015.