Item-Level RFID is an Essential Part of an AI Ecosystem for Retailers
According to Statista, 73 percent of retailers are already using artificial intelligence, and a further 15 percent are planning to implement the technology over the next 12 months. AI is proving to be a valuable tool within the retail sector, from delivering personalized product recommendations for customers to enhancing inventory-based decision-making and predicting demand, among other things. This has caused many retailers to take note of AI’s potential, especially with the extraordinary hype around generative AI and large language models (LLMs) in 2023.
However, retailers need to consider several factors before investing in AI deployment. Accurate inventory visibility is critical to the success of AI inventory-related operations, which is where the transformation of item-level RFID technology comes into play. Combining the two technologies can generate significant value in inventory management and operational efficiencies, ultimately enhancing the return on investment anticipated from AI investments. RFID solutions provide real-time identification and location tracking of items in retail stores, distribution centers and factories. Ultimately, the disruption that comes from combining item-level RFID and AI investments into a more comprehensive enterprise intelligence strategy will enable retailers to create a competitive advantage.
Challenges of Successful Deployment
Despite AI’s promise to unlock new efficiencies, success is often restricted due to inaccurate inventory visibility when it comes to inventory-related operations. Typically, retailers operate at an inventory accuracy of less than 70 percent, and if AI analyzes these inaccurate datasets it will provide unreliable outputs and actions. Maximizing inventory accuracy is crucial, as it provides a foundation for retailers to deploy other technologies, particularly AI. In addition, the enhanced fidelity that item-level RFID brings to a retailer when combined with AI technology is extremely disruptive. For instance, knowing when a particular item has arrived in-store and what its history looked like opens up a fascinating number of possibilities.
Deloitte’s 2024 U.S. Retail Industry Outlook further revealed that only 50 percent of retail executives are confident in their company’s ability to use AI effectively. This is due to a lack of understanding of the technology itself and the best ways to maximize its value. To harness AI’s potential, retailers need to implement item-level RFID, specifically to optimize their inventory management and operations.
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