The University of Arkansas Radio Frequency Identification Research Center unveiled design plans for its new home despite waning interest from Wal-Mart.
The center celebrated its seventh anniversary Tuesday (June 12) with an open house releasing plans for a new stand-alone 20,000 square foot warehouse in Fayetteville. It is twice as big as the research center had been using.
“It’s been a dream for a long time. RFID touches everything,” said Justin Patton, managing director of the RFID Research Center at the Sam M. Walton College of Business.
The new space gives the researchers three retail models giving them a giant testing ground for any retail specialty whether it’s raw materials, supply chain or customers at home.
While RFID is growing at the UA, its biggest cheerleader — Wal-Mart — isn’t as enthused. During this year’s Wal-Mart shareholders’ meeting, the retailer said RFID wasn’t a priority in its international sector.
Indeed, Wal-Mart Stores Inc., bet big on RFID back in 2003. It asked its top 100 suppliers to begin tagging products at the pallet and case level by 2005. But the Bentonville-based retailer has backpedaled for the past few years as suppliers didn’t share the excitement. Wal-Mart said it would implement the technology at its distribution warehouses, but then changed that to store level application moving in baby steps after 2007.
Doug McMillon, president for Walmart International, says the RFID target has moved around some for the giant retailer in recent years.
“I think the work we did with RFID in the U.S. was interesting and that’s continued to live on. But it’s not happening internationally, we are more focused today on mobile payment. I don’t think RFID will be as pervasive as we once thought it would, but we continue to stay engaged at the UA to try and make the math work in a practical sense,” McMillon recently told reporters at the shareholder media conference in Rogers.
Bill Hardgrave, who ran the Arkansas-based RFID Research Center until 2010, has been quoted that Walmart over-hyped RFID and just about killed it.
Patton has been with the research center since its opening and said there have been a lot of attempts over the years now the attempts have gained focus. He said the growing pains of RFID haven’t been a Walmart issue rather, an industry one.
“It was a huge splash and kind of died out. At the time, no one understood the implications of the amount of data you would get back. Now the technology has advanced where it is tagging at the granular level and focused on the sales floor,” Patton said.
Patton and the UA researchers want to be the first in new and emerging retail technology and help retailers analyze and test RFID on certain items for immediate wins.
“We have RFID systems out there right now and point-of-sale systems in the transaction atmosphere. Just because the technology exist doesn’t mean it’s financially feasible,” said Patton.
For instance, the technology with RFID is different in every country. Each has its own frequency range. The tags would work well across regions but not when trying to expand across many countries. With challenges on a global scale for retailers, some analysts predict RFID isn’t worth the hype while others contend it’s still in its infancy and will see payoff in three years.
“The truth is someone in between,” said Patton, “Are we going to have every item in a grocery store tagged in five years? No but RFID is here to stay.”
Patton’s work at the research center shows the technology pays off when tagging on certain items. For apparel, it’s proved to have 95% accuracy for inventory. In a world where online shopping is taking over the brick-and-mortar stores, it could prove significant.
A RFID tag costs between seven and ten cents. In departments where margins aren’t that close, like apparel, it’s not a deal breaker.
Patton said for produce it is, “You aren’t going to see a RFID on a watermelon.”
He has a technology background with a strong business focus and wants to evaluate these new technologies against retailers’ bottom line.
“The stores can’t rely on customers coming to the store and retailers have to do a better job of attracting customer’s attention and retaining it. You can make sure you know your inventory and leverage technology in a world where customers don’t have to get in their car and walk to your store,” he said.