RFID technology is helping drive sustainability in retail

Jessica St. John
30 August, 21

The success of a business comes down to the endorsement of its consumers and stakeholders. For it to stay that way, businesses must cater to their consumers’ needs and values. More than ever, consumers value sustainability above cost, product and location. This means the businesses that are thriving in today’s market are doing so because they are seeing and adapting to sustainability expectations.

The demand for sustainability from consumers is present throughout the supply chain. They want to know that the products they are purchasing are not having a negative impact on the environment before they reach their homes. This is where Radio Frequency Identification (RFID) can play a vital role in meeting and exceeding sustainability expectations.

In the past, RFID solutions have generally been sought after for their ability to improve inventory accuracy. Yet retailers are now also understanding their place in monitoring and improving sustainability practices using RFID’s tracking capabilities. This is especially true of the impact it can have on waste and recycling within businesses.

RFID tackles waste

RFID inventory management solutions allow retailers to deal with their waste problem and prevent overstock from happening through the reduction of their total stock holding. Simply put, this means purchasing less while selling more.

RFID technology optimises products that are already allocated to stores and ensures that they sell through the use of functionalities that improve inventory management-related store processes. For example, making sure products from the stockroom are restocked on the shop floor on time ensures they have a chance to sell and don’t end up being wasted.

One of the primary benefits RFID provides to retailers is the ability to dramatically increase inventory accuracy. Businesses using RFID report they have a greater than 95% inventory accuracy. Having accurate, item-level data allows retailers to increase their confidence in what they have and in turn lower their safety stock. Just by increasing inventory accuracy, RFID can contribute to a reduction in stock holding. Following a GS1UK research project in 2018 which saw 10 retailers integrate RFID into their businesses, six out of 10 of the companies were able to reduce total stock holding between 2-13%.

When less products are purchased, fewer are unnecessarily produced, which lowers carbon emissions, water use, water pollution, land use as well as the likes of packaging materials throughout the supply chain. If the amount of overproduction can be reduced, a retailer is able to make strides towards many of their other sustainability metrics, as each item produced and pushed through the supply chain increases their environmental impact.

Recycling and transportation

With millions of tons of clothes being sent to landfill each year, it’s become essential for retailers and brands to find ways to reduce the number of items being produced. With retailers currently operating at 65% inventory accuracy on average, implementing RFID for inventory management can lessen the environmental impact by improving accuracy and preventing additional stock.

With 98% accuracy achievable with the right technology, more informed decisions can be made around stock levels. If items aren’t selling, the amount being produced can be altered at the manufacturing stage to minimise the use of production materials and transport emissions. This process allows brands and retailers to determine that all the stock produced will be sold and fewer items will be sent to landfill. With more retailers making the pledge to reduce their inventory levels, the challenge they need to overcome is achieving this while still increasing sales.

With more sustainable retail on the horizon, brands are now under pressure to make sure the materials they use are having minimal impact on the environment. With this in mind, they need to take a closer look at their supply chain and start making small changes that over time will make a significant difference. An example of this is minimising plastic use in RFID tags and instead opting for a sustainable version, which allows RFID labels to be printed onto recycled paper without plastic layers and harmful chemicals.

As the conversation around sustainability and fashion picks up momentum, retailers are adapting to what their eco-conscious customers want and expect. Not only does this lead to increased social responsibility, but it enables retailers to attract shoppers to their brands while making a positive impact on the planet.

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