Careers Business Ownership Radio Frequency Information Device – RFID in Retail Share PINTEREST Email Print VCG / Getty Images News / Getty Images Business Ownership Industries Retail Small Business Restauranting Real Estate Nonprofit Organizations Landlords Import/Export Business Freelancing & Consulting Franchises Food & Beverage Event Planning eBay E-commerce Construction Operations & Success Becoming an Owner By Matthew Hudson Matthew Hudson Matthew Hudson is the author of three books on retail sales and has nearly three decades of experience in the industry. Learn about our Editorial Process Updated on 01/23/20 Radio-frequency identification transmits information via a scanner device and allows for the easy tracking and identification of products. The digitalized information can contain pricing and product specifications for the consumer or be used for inventory tracking and stocking for the company. Introduction of Retail RFID At a National Retail Federation (NRF) Convention, there was a presentation by a company of the "future" of shopping. They demonstrated a special tag affixed to every item in the store that would communicate with a network. This communication would tell the network or server what the item was as well as its current price. The vision was a grocery store loaded with these devices known as RFID tags, and the customer simply walking out the door to their car with the items—no need for checkout lines. The RFID tags on the items would tell the network how much to charge your stored credit card on the retailer's server or network. Now, years later there are still lots of holes in that vision. The use of RFIDs in retail has expanded and become commonplace. The most common use is for inventory control. Manufacturers can attach these tags and track a product through the entire process - from manufacturing and shipping to the warehouse and delivery to your store. In fact, this technology has been in use since the early 1970s when it was used for large items like cars and trucks. UPC Product Codes Essentially all products come with a UPC (Universal Product Code) or barcode on them. If they do not, many retail POS systems give you the ability to create a tag or label for the product with its proper item code. UPCs make life easier since you can scan it at the POS register to buy it. You can even scan the codes during a physical inventory process which saves time over handwriting product information. RFID tags are an improvement over barcodes since you can update or change the information on the tag. Since it communicates with the network, it can take the data stored on it change it to something new. You cannot do this with a UPC. However, RFID tags are a physical device that must be affixed to the product versus a UPC which is a simple barcode that can be printed. Offsetting Costs While the size of the RFID tag has changed drastically over the years making it a more feasible option, you still have to weigh the return on investment (ROI) of the cost to use them. In its simplest form, an RFID tag has data stored on a microchip inside. When it comes in contact with an RFID antenna (or reader) it communicates what is on the chip. The network that is connected to the reader can update or change the data stored on the RFID tag if necessary. But the cost for this technology is oftentimes prohibitive which is why there are now three types of RFID tags - active, passive and semi-active. As the names indicate, the amount of back and forth between the tag and the network is varied. The more active, the data change and the more cost. RFID in Application RFID is similar to Bluetooth and Near Field technology (such as iBeacons). RFID only works within the range of the reader or antenna. All of these technologies use radio waves to transmit a product's unique number from a tag to a reader. This is very different than a QR Code which scans but does not communicate with any other device just like a UPC. While there are no practical applications for RFID in independent retail, it is making its way into large-scale retailers. Wal-Mart, for example, requires RFID tags on certain inventory to be sold in their stores.