Tech invasion: Bar coding and RFID

Today, Indian retail industry is undergoing tremendous change with growing awareness about the organised retailing. Retailers are deploying new technologies to provide flawless shopping experience to the consumer. In terms of adoption of technology, the retail industry is fairly matured in the developed countries. The fifth largest retail destination in the world, Indian retail market is estimated to grow from $330 billion (approximately Rs 13,200 billion) in 2007 to $427 billion (approximately Rs 17,080 billion) by 2010 and $637 (approximately Rs 52,480) by 2015.The high-end technology like bar coding and RFID (Radio Frequency Identification) have been making waves of news in the retail industry over the past few years. These allow and enable retailers to deliver accurate merchandising, improve planning, increase profitability, enhance customer experience, improve workforce management and create an intelligent supply chain. RFID has become a buzzword among the Indian software companies and many of them are looking forward to tap this market.


Advanced technology

Modern technology is helping retailers around the world improve customer satisfaction and increase sales. It is transforming the retail industry by offering retailers real-time visibility into inventory and product movement to improve store productivity and loss prevention. Indian retailers like Reliance Retail, Pantaloon, Shoppers’ Stop and Spencers’ have been at the forefront to deploy fully integrated core enterprise resource planning (ERP) applications. Some of them have gone a step ahead by initiating the pilot phase of IT deployment such as RFID and customer analytics.

Mr Sidhartha B Chaudhary, AVP and Head of Retail & Consumer Delivery, HCL Technologies, says, “RFID is the technology of future, which will give real time inventory management capability whereas bar coding will gives automation at low costs.” On the other hand, Nilesh Shah, (MCP) Director Marketing of Rance Computer Pvt. Ltd, says, “Bar code and RFID technologies are not mutually exclusive but one will not replace the other. However, these are two different technologies with two different cost profiles and application usage. Bar codes utilise one-way, serialised and periodic data whereas RFID utilises two-way, parallel and real-time data.”


Bar Coding and RFID

In retail, bar coding and RFID are used in inventory systems, replenishment, warehouse management and real time positioning (RFID). A barcode (also bar code) is a machine-readable representation of information. Optical scanners called barcode readers or scanner can read barcodes. Initially, barcodes stored data in the widths and spacing of printed parallel lines, but today, they also come in patterns of dots, concentric circles and text codes. Barcodes are widely used to implement automatic data capture systems that improve the speed and accuracy of computer data entry. Barcodes solutions play an important role in utilising customised in-store marketing, increasing up-selling and cross-selling opportunities, quickly locating merchandise, easily monitoring inventory and checking prices. The state-of-the art solutions based on barcode technology enable retailers to improve the customer's experience at the primary point of decision – the selling floor.

RFID (Radio Frequency Identification) is a technology similar in theory to bar code identification. A RFID system may consist of several components such as tags, tag readers, tag programming stations, circulation readers, sorting equipment and tag inventory wands. The purpose of a RFID system is to enable data to be transmitted by a portable device called a tag, which is read by an RFID reader and processed according to the needs of a particular application. The data transmitted by the tag may provide identification or location information, or specifics about the product tagged such as price, color and date of purchase.


Implementation cost

Major IT companies have come up with the latest technology to provide better solutions to retailers.  Mr Shah says, “Retail or Point of Sale (POS) software is required to implement and support barcode and RFID technology. RanceLabTM offers FusionRetail, ready-to-use software for retail and F&B businesses. Software is priced at Rs 65,000 covering all the areas of retail business including merchandising, POS, customer relation and management information. Basic cost for bar code hardware such as printer, scanner and labels (consumables) starts from Rs 20,000 onwards. And, cost of consumables (bar code tag) starts from Rs 0.05. On the other hand, to set up RFID based solution, tags, tag readers, tag-programming stations, circulation readers and sorting equipment are required. Basic cost to set up RFID starts from Rs1 lakh while the cost of RFID tags start from Rs 15.” Sandilya Gopalan, practice director (retail & manufacturing), Cognizant Business Consulting, Cognizant, informs, "The cost of barcode and RFID technologies depends on various factors: business requirements, tagging volume, technology (active/semi-active/passive RFID or 2D barcode/1 D barcode), reusability of tag, areas to be covered, middleware features, scalability needs and so on. Approximate costs for bar coding technology are: bar code printer (Rs 20,000 - 25,000), barcode scanner (Rs 6,000) and stickers (Rs 0.5). As for   RFID, the approximate cost figures are: passive UHF RFID printer (Rs 2 lakh), passive UHF RFID reader (Rs 1.5 lakh) and passive UHF RFID tags (Rs 10, which changes with quantity.)  RFID middleware can cost up to Rs 3 lakh, with costs varying based on requirements. "


Market size

Usage of the technologies under the AIDC umbrella has been changing somewhat rapidly over the years. Bar coding was the only technology used but today; the industry has adopted radio frequency based identification. Major IT companies have come forward to provide technology solutions to retail companies. Mr Gopalan says, “The demand for these technologies has been robust and strong growth is expected. The RFID market has been growing at over 40 to 50 per cent in the last few years with the boom in Indian retail and manufacturing sectors fuelling the growth.” Advocating favourable factors, Mr Shah, says, “Today, retail industry is growing like a rapid fire. Everyday, more brands are coming in to directly cater consumers, offering wide product range.  It is an exciting time for both retailers and IT service providers. With the help of IT services, existing business is growing at a great pace and it also creating a scope of newcomers. Fuelled by unceasing success, the future does look bright for those tools that have helped boost the efficiency of countless businesses.”



The future of bar coding and RFID in retail industry seems promising in future. Mr Gopalan, says, “Bar coding will witness major growth in India, primarily due to the expansion of organised retail. Major international players in bar coding technology including Symbol, Zebra and Intermec, are targeting India as a focus market. These companies have been offering special pricing for the Indian market to promote the technology and to make products affordable for even medium scale operations, thus opening up large volumes. However, the adoption of RFID in the Indian retail sector has been slower than it would have been, due to high prices of RFID tags and readers. Retail giants are looking to using RFID in the supply chain at the pallet level, instead of item level, due to cost considerations.” Sharing his opinion and observation, Mr Chaudhary says, “In the case of RFID technology, Indian retailers are going ‘wait and watch’ way. Unlike in the West where retailers are mandating the vendors, we feel that, in India, the suppliers would be leading the implementation of RFID in collaboration with retailers. We believe that in three to five years, some retailers would move up the value chain of RFID realisation and start using the technology for higher value processes like standards and regulatory compliance, analytics and vendor management inventory.” In India, the retail industry is still nascent and poised for an exponential growth. RFID technology with its advantages will catalyse the growth in future.

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