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One of the largest industries in the global economy is retailing. It is the second-largest sector in terms of the number of establishments for doing business in the United States, and the number of employees (Vargas, 2007). According to a report from National Retail Foundation (NRF) (2020), there were nearly 4.2 million retail establishments across the United States in the year 2018, and these businesses accounted for 11.6 percent of all business establishments. The retail industry directly provided 32 million jobs for American workers (accounting for 16.0 percent of the national total), making it the largest private-sector employer in the country. The industry also directly paid out $1.0 trillion in wages and salaries and generated $1.6 trillion in the gross domestic product (GDP).
Increasing globalization has increased retailer competition, motivating companies to strive for better performance (Koh et al., 2006). Sustaining a competitive advantage is the trademark of today’s retailing environment. Retailing is emerging to be a technology-intensive industry where the key differentiator between successful and not so successful retailers is ‘the area of technology.’
Retailers see Radio-Frequency Identification (RFID) technology as a possible means of staying competitive and achieving profitability both in the short as well as in the long term (Wamba et al., 2006). Major retailers in North America, Europe, and Asia acknowledge the significant opportunities in RFID technology. In the US, Wal-Mart was the first retailer to realize the possible cost savings that could be made possible by using RFID technology in its supply chain and distribution centers. In June 2003, Wal-Mart mandated its top 100 suppliers to use RFID tags on selected pallets and cases beginning January 2005 (Fosso Wamba et al., 2016). For Wal-Mart, RFID technology provided a 16% reduction in out of stock situation and a 70% drop in the receiving time of new shipments from suppliers within a year of receiving tagged products. The vast improvements arose from in-store inventory tracking capabilities provided by RFID technology. While Walmart's initial effort has been focused on Information Technology (IT) integration with pallet-level RFID tagging, recent efforts since 2010 have investigated item-level RFID tagging (Roberti, 2014).
RFID technology is not limited to suppliers and retailers in the US. In Europe, retailers like Tesco, Marks, and Spencer, and Metro Group have implemented RFID technology in their supply chain. In 2004 Tesco, the largest retailer in the United Kingdom (UK), started tagging cases of non-food items at its distribution center and tracking them to their retail stores. By April 2006, 40 out of 1400 Tesco stores were equipped with RFID technology. RFID allowed for greater supply chain visibility and simpler processes for its staff, resulting in improved product availability, improved service, and reduced prices for its customers (Collins, 2005a). Marks and Spencer, a major UK based retailer of clothing, food, and home products, began testing with RFID in 2003. With RFID use, they were more aware of their inventory, and it reduced the time it took to record inventory by seven hours per week for a single store. Additionally, constant inventory updates ensured better product availability (Collins, 2005b). The third-largest retailer in the world Metro Group began using RFID in its supply chain in November 2004 to track incoming and outgoing shipments. METRO Group is reaping the time savings, labor reductions, and inventory benefits from using the technology. RFID technology allowed for a 14% reduction in warehouse labor, an 11 percent improvement in-stock availability, and an 18% reduction in lost goods for Metro Group (Intermec, 2007).
In Asia, most retailers expect to benefit from integrating RFID practices across company lines except for China. Chinese retailers expect to use RFID within their company boundaries in transportation and on personal tagging to monitor the workplace. In contrast, Japanese retailers are using RFID tags to monitor and control distribution and sales of women’s shoes and apparel in stores (Fish and Wayne, 2007).
According to IDTechEx (2018), the total expected RFID market in 2019 is worth $11.6 Billion and is expected to rise to $13 Billion in 2022. This includes tags, readers, and software/services for RFID labels for both passive and active RFID tags.