At Uniqlo’s Fifth Avenue store in New York, shoppers can check out simply by placing items in boxes at the vending station. Unlike the self-checkout process at many stores, the casual apparel retailer’s customers don’t need to scan individual items or look up prices on a screen – they simply drop them into the corresponding box and pay for them.
This new generation of self-checkout devices is powered by an RFID reader inside the cash register. The reader can automatically read a hidden RFID chip embedded in the price tag, which is reported to be Asia’s top clothing retailer Fast Retailing Co. Cio Takahiro Tambara’s strategy. Fast Retailing Co. is Uniqlo’s Japan-based parent company. Tambala set out several years ago to change the way customers shop in physical stores, which remain central to the company’s business model even as more commerce moves online.
Tambara said self-checkout machines are at the heart of Uniqlo’s use of RFID to improve its supply chain. As early as 2017, all Fast Retailing brands, including Theory and Helmut Lang, have started embedding RFID chips in their price tags, allowing retailers to track individual items from factories to warehouses to inside stores. The company also said the data is crucial for Uniqlo to improve inventory accuracy, adjust production to demand, and improve supply chain visibility.
“We introduced RFID not because we wanted to automate the checkout process, but because we wanted to develop a platform to use it throughout the supply chain,” Mr. Tambara added.
Praveen Adhi, a senior partner at McKinsey & Co. ‘s retail practice in the Americas, said the cost of RFID tags has fallen to 4 cents from 60 cents a few decades ago, and reader hardware has improved in range and precision. Newer, cheaper RFID chips, reader hardware and software allow retailers such as Uniqlo to implement the technology at a lower cost and with greater precision.
Uniqlo also said that RFID technology has greatly reduced the phenomenon of stock shortages on the sales floor, while helping to “reduce the chance of customers being unable to shop due to stock shortages, thereby improving customer satisfaction.” But the company declined to provide more specific information about the technology’s impact on the business.
Fast Retailing has been testing the technology since 2013 and began rolling out RFID-enabled self-checkout machines in some stores in 2019. Mr. Tambara declined to give a specific amount of money Fast Retailing has spent on the technology, but he said the company has doubled its investment in information technology since 2016. In 2016, Fast Retailing launched a strategy to become a digital clothing retailer and developed its own e-commerce platform.
While the most common use case for RFID is to improve inventory management, the use of RFID at self-checkout machines is also gaining popularity as more apparel retailers explore ways to apply the technology after items are labeled. Adhi said that for most apparel brands, implementing RFID “will be on the agenda in 2023 or 2024.”
He added that many retailers still rely on barcodes, which require manual scanning and carry limited data. But the unique advantage of RFID-based checkout systems like Uniqlo’s is that they are faster and more accurate than barcode-based self-checkout machines. Fast Retailing is one of the few clothing retailers to date to implement RFID self-checkout on a large scale, which highlights the problem that retailers need to overcome before large-scale rollout of RFID – the long deployment period. Uniqlo revealed that its cash registers are available in all 47 stores in the United States and 16 stores in Canada, as well as 14 stores in 25 malls.
Fast Retailing says that since the launch of its vending machines, waiting times for customers at the checkout have fallen by 50%. The company has integrated RFID okuyucular and antennas into its point-of-sale systems and says items are no longer tracked after purchase.
However, many shoppers are still hesitant to use self-checkout machines because they are put off by hard-to-scan items and other issues with self-checkout machines. Of shoppers surveyed by customer experience technology company Raydiant in 2021, 36 percent said they had significantly increased their use of self-checkout, while 67 percent said they had experienced some kind of glitch on their machines. So retailers like Uniqlo are hoping to allay consumers’ fears by offering better technology.
ChatGPT has captured the world’s attention recently, but there is still a lot of work that can be done with simpler technologies like RFID. Sucharita Kodali, vice president and retail analyst at Forrester Research Inc., said RFID is the most practical product tracking technology available, if not the most advanced. Computer vision works as artificial intelligence that can analyze images, but it is currently too expensive to be widely used for self-checkout and inventory management.
Uniqlo’s competitors, such as Inditex, the parent company of the Spanish fast-fashion brand Zara chain, started putting rfid tags on their goods in 2014 and have been testing the technology for self-checkout. French sporting goods retailer Decathlon said it began installing RFID at more self-checkout machines in 2014.
