Join Mike Graen as he welcomes Justin Patton and Matthew Russell from Auburn University’s RFID Lab, for an update on the state of RFID in the retail industry.

Retailers such as Walmart, Target, Macy’s, Nordstrom’s, Dick’s Sporting Goods are all leveraging RFID to improve on hand accuracy. Explore the status of RFID at retail including use cases such as on hand accuracy, omni-channel picking, asset protection, reducing labor for inventory counting, product authentication, avoiding counterfeit product, supplier claims reduction and frictionless customer checkout experience.

This episode specifically explores:

• - Rebound of brick and mortar retail.
• - The factors that drive interest in the market.
• - Categories of products that are difficult to tag.

Understand the role that the Auburn RFID lab plays in driving industry adoption of RFID in retail.

Greetings as my crane on behalf of the Walton

Supply Chain Center. We want to thank you for joining our

podcast today. Today, it's all about on shelf availability and

the role of RFID. at retail. I'm joined by Justin Patton's, who

is the Executive Director of the Auburn RFID lab, and Matthew

Russell, who is the director of the RFID lab as it relates to

retail. Let's get started. Awesome, Matt, thank you very

much. Appreciate it. Welcome to as Matt mentioned, a beautiful

day in Northwest Arkansas, Auburn. Hey, Auburn University.

What's the weather like down there and decide if I wanted

vacation in the next week or not? What do you think?

It's pouring down rain?

Don't be surprised if our internet cuts

out.

Well, that's what it usually does. It usually comes

this way. I think the mat the last couple of days, we've had

torrential downpours, especially at night. So the dogs definitely

don't like that with the thunder and lightning. And it's August.

We're not supposed to have tornado threats in August. But

unfortunately, we have we have done that. So let's say a couple

seconds introduce Matthew and Justin, I think most of the

folks on the line have have probably had a chance to

interact with you, you and I've had these podcasts slash

conversation several times. But for those of you that may be new

to the space of RFID, you wanted to introduce yourself for me

real quick.

Matthew, you want to go first?

Sure. Matthew Russell, I'm our director of

retail here at the RFID lab. Been here for about five years,

have a background was just started as a student, and then

supported a lot of work that we do with data, and then now help

support some of the broader retail projects that we have. So

excited to be here. Mike. Worked with Mike for a while. So known

him for a good bit now. Justin?

So my name is Justin Patton. I've been running

the RFID lab for since the beginning. So we started the lab

in 2005 there at the University of Arkansas, and we've been down

here at Auburn for the past nine years since 2014. So I'm in

charge and making sure that everything is running smoothly,

I guess for the lab. And then Matthew, we're lucky enough to

be able to get Matthew in to head up everything on retail. As

we've grown, it became important to make sure that we had

somebody with their eye on the ball across the whole industry.

So he's the go to expert on that space.

Perfect. Thank you. Matt, we you are you are a

student at the Auburn University. Right. And you were

you graduated when?

Two years ago, a little over two years ago now.

I was a student in business analytics. So background and

data, data analytics, stayed with the lab for a year then I

actually left and went and worked did some work with Ford,

the new Bronco and then that Justin was able to get me to

come back and ended up back at the lab and the RFID world. So I

couldn't escape it.

Yeah, so So I see I see him as part of the

participants, or at least the attendees, Dr. Hargrave, you

always said Justin Patton couldn't sell. But he clearly

sold Matthew and coming back and it was one of the best sales

ever made. That's for sure. That's for sure. We're happy

that we're happy to have you back. Matthew, we really are.

And that kind of leads into just the first question, which is,

you know, RFID was back in 2005 was University of Arkansas. It

was that really, really hot handle, Hannah's Candle Factory,

all that kind of stuff. It was case and pallet, et cetera. And

when I think there was maybe I can count on one hand, the

number of people you actually had there. Now you literally

have a lab that has moved to Auburn University. And by the

way, it was only focused primarily on retail and supply

chain and things like that. We'll fast forward to now you

got over 100 people in the lab, you're in all kinds of

verticals. So so obviously, Matthew is standing up the

vertical for retail, but you have other verticals, well just

walk us through that transition of of what you're working on

now. What's your focus there, and how's it migrated over the

years?

There's been a lot of growth, you know,

currently we have 10 full time staff and then we have 107 part

time students that work down here on various different

projects and and then a lot of faculty on campus that obviously

do their thing as well. So um, you know, been real heavy in

retail since the beginning. That's where we got our start

right there with that first WalMart study back in 2005, with

case and pallet in the supply chain, but what we find is that

retail doesn't own all the supply chain problems in the

world. Lots of people have similar issues. So RFID is

pretty broad base Ace, we've done a lot of work even since

the beginning with aviation, on aviation manufacturing, and then

more recently for the commercial aviation for like baggage

tracking and trying to get into some of the consumables on the

aircraft and things like that. There's a lot of work going on

right now in the food space, with some of the restaurants and

the QSR that are starting up RFID programs for the food

safety, Modernization Act compliance and other things like

that. And, you know, animal tracking, you name it,

somebody's put an RFID tag on it at some point. But our goal at

its core, is we want to serialize inventory. So it's

really an accounting problem more than anything moving us

from quantity accounting for inventory and supply chain to

serialize unit level track and traceability. And RFID has been

through a lot of ups and downs over the years, but it's a broad

technology base, and it has served us well. And, and with

things like COVID, it's just continued to gain momentum and

increase because we're becoming more and more apparent that we

have supply chain problems that need to be resolved with more

tech in. And that helps bring more attention to the lab. But

the most important thing of the lab is the students that are

graduating out. So the whole goal and the purpose of this

engine is to drive students that are getting degrees in various

different majors and going out into the market space and then

hoping to get jobs and then they hire the next generation, so on

and so forth. Just every once in a great while, we reach back out

and pull one back in like Matthew, we just can't do

without. So anyway, that's the point.

Well, it's an incredible model that you build.

Because you know, I can only speak when I was going through

school. Yes, they had colleges back then Matthew, Don't get

smart. I know where you're thinking why they had colleges

went back then you would you would all do everything through

textbook. And if you were fortunate enough, you got to do

a summer internship with a company. But some of the

students in your lab I mean, specifically you you get a

chance to work with specific projects with multiple retailers

and CPG brand owners, etc. You get exposure to the industry,

which just continues to you start you almost are doing an

interview process. And I would think it would makes it much

easier to place those students within those companies once the

once the degree stops. Right. And when did you get your

degree? Correct? That would be that would be the hope anyway,

for sure.

Yes, that's the plan.

All right. So retail, Matt, lots of stuff

going on in retail, kind of walk us through what some of your top

line thoughts are the retail industry, you are kind of doing

the business analytic work before. But what are some of the

retail you know, opportunities that you see on the horizon?

Because you're over kind of all retail right now? What's what's

what's hot, what's not? What's going on?

Yeah, I think, you know, coming out of the

pandemic, there was a lot of question, what's going to happen

to brick and mortar retail? Right? Everything was very much

focused on on e-commerce and and omni channel and how do we get

product out and the most effective way? If customers

aren't necessarily going back into stores? I think now we're

we're definitely seeing that that this switch, like, we're

pretty surprised by the amount of effort that's going into

brick and mortar stores, a lot of new technologies, not just

RFID, but also looking at computer vision, other radio

technologies, I think there's a lot of effort that we're seeing

being put into efficiencies in brick and mortar stores. And

then on the RFID, specific front, it's seems like almost

every retailer now is looking at RFID and sort of asking that

question of, do we need to be doing this? Or how do we do it?

And trying to jump in there and get on that and even retailers

that have been on that RFID train for a while. Now we're

looking to expand to different categories, different products

that we may not even thought could be tagged before, there's

pretty much everything in a retail store at this point has

been tagged. And so I think, you know, high level, I think

there's a lot of excitement around that and retail, but also

around other technologies. It's there's a lot of exploration

going on.

So I see expansion in a couple of different ways,

right? And you probably have seen him more than anybody so

RFID used to be apparel, we can do this for apparel, and maybe

shoes right nothing outside of that. Many, many retailers are

making a very public that they're going after a lot of

categories outside apparel, including general merchandise,

some of them are looking at food and so don't get specific about

which retailers are doing it. But what are the some of the new

categories that you're seeing being asked? That's a question

for either one of you. What are the new categories outside of

apparel that you're seeing be RFID being applied to for

retail?

I mean a lot of like you said general

merchandise, so home and office supplies, all sorts of

everything in that category. Sporting Goods, we're seeing a

lot of that now that's been tagged a lot in the automotive

space. So tires, different fluids, batteries. If it if it

can be tagged, then then odds are someone's looked into how

they can tag it. And even now looking beyond that, you know,

items like pet food and tools, and the tool industry is huge.

And there's a lot of interest there, I think in tagging those

types of items. So it's, it's really broad. And you're right,

it did start with apparel, but now it's sort of expanded out

into just about everything that has potential.

The interest typically tends to be based on a

few different factors. One is substitutability. So if you have

an inventory item with a low substitutability, like, for

example, blue jeans, if they don't have your size, you can't

buy another size, because it doesn't work that way. Whereas

ketchup may have high substitutability. Because if

they don't have you know, brand A then you'll buy brand B. And

then there's also a SKU complexity. So, categories that

have high SKU complexity, again, denim, there's a reason

everybody starts with blue jeans, high SKU complexity, low

substitutability. Lots of inventory problems, people want

to resolve it, these categories that are coming up now the new

factory that's being added in there, it's things like as Matt

mentioned, electronics and sporting goods, those are

heavily researched online and targeted purchase buys. So

people don't just walk into a store and say I'm looking for a

new TV today. Typically, they've spent time they know exactly

what TV they want to get before they go down there and purchase

it. So when people are sniping purchases like that, in stores,

it's very important that your inventory accuracy be really

tight. So those and I didn't really realize this, but

sporting goods is right up there with electronics, in terms of

upfront research before people go buy things. So those areas

have been been heavily focus like the probably the golden.

The one that everybody wants, that we're not quite there yet

is cosmetics, because again, very low substitutability Very

high SKU complexity, lots of pre pre search before, purchase

those type things. But um, but yeah, that's been the kind of

the growth path.

Yeah, so So I think that's exactly that's very, very

well said. In Matthew, I think I know what your what your answer

this question, what will you think about a mass merchandiser

like a target or a Walmart, etc? Do you see in your lifetime,

where everything in the store is going to be RFID tag, including

produce and canned vegetables, etc? or is this going to be a

particular technology that works for a certain type of product

very well.

I think it's dependent on if the physics

allows it. Right? There are there are physics limitations to

tagging products. And at the end of the day, if something can't

be tagged, and it probably won't be tagged, but if it can be

tagged, I do expect and in my lifetime, that it probably it

probably will be.

Yep. So as part of that, I guess my question is,

what are the categories that are currently considered to be

difficult to RFID tag because of the metal and liquid that you

guys think a industry called action with some of the tag

providers looks like help I may have for example, I know one of

the ones that I have, I've heard about before is cans of paint.

How do you tag cans of paint when they're metal cans, and

there's liquid inside etc? So that may be one example. Do you

have other Justin you just bet your cosmetics? I've heard that

as well. That's really important. But you can't put a

great big tag on the thing lipstick, because the aesthetics

don't work out very well. What are the categories, you are

trying to push the industry a little bit, specifically tag

providers to come up with a form factor that will work.

So I mean, you kind of hit the nail on the head

there anything with a lot of metal in it is can be a

challenge anything with water, and it can be a challenge. And

typically even then we've still overcome a lot of those with

tagging, then you have to worry about context, right? Because

it's one thing to read like that canopy an example. If I've just

got one of them sitting in front of me on a shelf, and I'm trying

to scan it with a handheld. It's a very different scenario, if

you have 12 of them in a box with all kinds of other stuff

around it in that box that is also metal and liquid that is

interfering with that signal. So I think really the biggest

concern up till now for RFID tagging has been the size of the

tags and the size of the inlays because everybody wants little

tiny tags. So we still are working through some physics on

what you're attaching things to. But I think that making sure

that you can get them down to an appropriate size so it doesn't

require a big packaging change has been the most difficult. I

mean, there's a few categories to that. Just continue to

surprise. Candles has been really hard. Because I don't

know why it's we The physics are very Incan system for candles

when it comes to RF waves? Who would have guessed? I mean, if

you had said, Hey, pick all the stuff in GM in this store. I

mean, we've been around RF for a long time, but every once in a

while something will just throw you a curveball and you just

don't know. So you know one thing that was another weird one

we saw in the past was those a little microwavable like ravioli

bowls or whatever, you put a tag on facing the antenna doesn't

read so good, you flip it around on the back. So that's away from

the antenna, it works great, who knows. But a lot of the stuff

especially things with a cardboard boxes and packaging,

even the stuff with foil linings and stuff like that, it's not so

bad anymore. So but um, you know, I think part of this to

Mike is important question is, there's a difference between the

physics being worked out and saying, Hey, here's where you

can put tags on a box. And then somebody going through and doing

the industrial engineer, the industrial engineers, they have

to set up how are they going to put the tags on these things, if

it's a slightly new packaging, production design and, and

that's where we really leverage the product manufacturers

themselves, and then also their label and packaging partners to

get that done. So they're getting it done. They're getting

there.

Awesome. I've actually got a good friend of

mine from Fuji films, who is on the call, he actually asked me a

question, which is, well, it's kind of a comment are installed

film for the Fuji film are currently out of scope, but

they're high fat. And unfortunately, they're out of

scope person, Auburn. So what is it about the contents inside the

box with fuji film? I'm assuming it's the aluminum foil inside

the box that makes it a particularly difficult category.

Is that correct?

I'm not sure if I'll film is out of scope for

all of the current retail projects, you know, film in the

past is kind of like printer ink. It typically has a little

foil pouch on the inside. It's not as bad as it used to be, you

know, we could put some cardboard did typically or some

type of a cardboard outer box or case or something around there

as well. Some of it may have to do with the case pack too, when

they put things together. But, you know, usually, there's some

type of resolution, depending on the shelf cap configuration, if

it's retail on sales floor, if somebody's looking for it from

supply chain for clients compliance or something like

that do but but yeah, you typically want it's a size of

inlay type of inlay type situation.

Gotcha. So So one of the things I want to do is kind

of transition. And Dan, I got your question on the Sensormatic

tags. I'm going to come and kind of come around to that, because

that'll come up here in a second, I'm responding to a

question I've got. So that's the category roadmap sounds like

things like general merchandise for sure. The whole cosmetic

space is an opportunity. Justin, you just mentioned RFID in the

food industry, both quick service restaurants, but you

know, grocery retailers are going to start to look at

leveraging RFID for aging, human aging inventory and markdowns

and stuff like that. So that's the category growth, I don't

think it's ever going to be the entire box, my personal opinion.

But I think it's going to be to continue to grow and be kind of

the first solution that people think about just in front. So

that's categorically from a functional standpoint, when you

look at the base of the triangle, being on hand

accuracy, visibility. That's why most people get into this game.

But there's a whole bunch of other things that you can do

with it all the way to the vision, the future vision is

seamless checkout, I remember that in the 70s, that IBM

commercial that still was really, really hard because we

still don't know how to do that right? Pick up stuff and walk

out the store and it takes it out of your credit card. So what

is that hierarchy? So if we're if Matthew just walked through

the category expansion, one of those business uses like shrink

and asset protection and things like that, that you're seeing

that the retailers are asking for.

We've seen a lot of people come in at different

ways. In retail in particular, most people focus on store

operations first, because it's so messy, like there's no such

thing as a Six Sigma customer. I've heard Hargrave say that

many times. So you can have a really tight, you know, DC and

warehouse and supply chain operation. But as soon as it

gets to the store, like all bets are off. So I think that, you

know, the inventory accuracy fundamental is most important

and a lot, it took us a long time to get a lot of retailers

to admit that they had an issue, some of them still won't. I

mean, you remember early on, like you would go to retailers,

and it's like, what's your inventory? Inventory accuracy?

Oh, it's 94%. Like, come back to us when you come back to reality

because it's not, you know, it's typically more in the 60% range

post COVID We've seen that go down generally hovers around the

50 to 55% range for most retailers. And that's not just

apparel that's across the board. It's pretty terrible. So, you

know, trying to get the fundamental inventory accurate,

makes everything else work. But as you said, like there's a lot

of stuff we can do for customer experience and loss prevention

and or some fancy things that we can do, I think in stores to get

a little bit with customer insights and things like that as

well. But um, inventory accuracy is a fundamental. So you got to

get your fundamentals under control, you got to get them

right, you got to get good at it before you go out there and

start trying to do more advanced stuff with it and flex your

muscles a little bit. And it typically, inventory accuracy is

what drives that base to get everything tagged up or to get

it in system. And then from there, that's when you start

layering on more of the category specific or the item specific

use cases.

Yeah. So I want to I want to loop back to Dan's

question from Fuji. Because there has been a long term

discussion regarding sensor technology to use for asset

protection or loss prevention purposes. For years, it's been

EAS right electronic article surveillance is whether it's a

Sensormatic, or checkpoint doesn't matter different

different solutions, etc. But they're the ones that do the

what I call the nuisance alarm that goes off and everybody goes

out thing's been making noise all day. Don't worry about it.

Go ahead because somebody forgot to demagnetize it. Are you

seeing any direction from the retailers to stop putting

electronic article surveillance on product and just put an RFID

tag because I'm assuming RFID has the ability to not only

alarm at the door, if that's what you want, but also provide

specific information about what item left the store any? And

again, I'm not asking you to share anything confidential. But

do you think that's a direction that the industry is looking at?

I think, right now retails getting, you know,

hammered on LP and AP, don't mean not to get political or

anything. But I mean, we basically decriminalize

shoplifting for most of the United States. So I mean, it's

crazy. I mean, you could just, it's like an ATM, don't do it,

but you're probably not gonna get trouble if you do. So that's

kind of the approach, I think a lot of times in the stores

really feel that. And I think that anything they can do to

enhance visibility. And I think what most retailers want, is

what we call proactive LP or proactive AP, rather than after

the fact. So they want to stop the theft event or the loss

event before it gets to the exit, not catch people out there

in the parking lot. Because that's a, it's too late to

paying the bullets messing everything. So first step of

that is just get visibility, the problem, because shrink shrink,

we don't know what it is. So a lot of times, you know, brands

used to joke about this brand overdone, you know, he would say

like, they would do these studies all the time. And they

were like, what are the sources of shrink, and it was always

like a three way split between internal theft, external theft

and just general loss. And it was always three way because

nobody knew they just guessed. So that's kind of how it fell

out. But I think once we can kind of quantify that and

understand like, who is taking things, and then who is losing

things, and what is the actual issue here, then I think we can

get a better handle on what we should do to resolve it. In

terms of replacing traditional EAS systems. I do know that most

of the companies that have sold traditional EAS systems also

have RFID systems for the future. But it's not a one to

one parody, right. So like, if you're a target, for example,

and you have RFID, on all your peril, as you do, and I'm not

saying anything in particular about what target is or isn't

doing. But you know, it may require more of that store

before you want to invest in infrastructure just to do RFID.

For an exit control solution, you kind of need a broader base

of tag stuff out there before it makes sense. And that's that for

target this for every retailer. But if you're a vertical brand,

or a vertical retailer, and you control your own supply, and you

tag up all your stuff on your own, and you know you're tagging

bakes is good, it's much easier and much faster for them to move

to sort of some type of a monitoring system. It's not just

exit scanners, it's the cycle counts and comparing those to

current data. Honestly, a lot of shrink happens on receiving in

apparel, I'd say probably on certain items, the majority of

shrink happens on receiving then on customer stealing on the

outbound. So you know, I think it's it's easier once you get

that source tagging base there to justify that shift.

Yeah, I would agree with everything you said. Here's

the one thing that I would like to build on. And hopefully the

industry hears this, if I've made a choice, whether I chose

to or because a retailer asked me to, to put an RFID tag on it.

Don't make me put an EAS tag at the same time, allow that RFID

tag to be used as EAS. Because the reality is, I'm a retailer

or I'm a supplier and I got to figure out well, so my business

is going into a Sensormatic someone's going into a

checkpoint. Now they're asking for RFID. I'm just continuing to

add cost to the product, the product. And I think RFID has

the potential to replace all that with a single. So yes,

cantaloupes won't be tagged anytime soon, right, I get it.

I'm not saying it's 100%. But if you're asking people to RFID

tag, let's figure out how to leverage that tag as that asset

protection tool as well. Like that was that's kind of the

point. While hope you enjoyed the first part of our talk about

RFID and retail, join us next time as we continue our

conversation with the folks at Auburn and talking about our

RFID in retail.