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Retailer Mandates are like Dominoes

This article originally appeared on RFID Journal.

With first Walmart and now Nordstrom telling suppliers to tag goods, the RFID industry as a whole will benefit—and other companies will hopefully follow suit.

Much has been written about Walmart’s history with RFID, both here and elsewhere. Two decades ago, the retailer required that suppliers add tags to all goods supplied to stores throughout its chain. After launching that effort in 2005 with 100 suppliers, the retail giant then expanded that number to 500 (see Walmart Draws Line in the Sand, Walmart Spells Out RFID Vision, Walmart Expands RFID Mandate, Walmart Details RFID Requirement, Walmart Relaunches EPC RFID Effort Starting With Men’s Jeans and Basics and Does Walmart Use RFID?). Many viewed this as a positive sign for the future, predicting other retailers would follow the example and issue tagging mandates of their own.

But by 2007, Walmart had begun to step back after facing unexpected hurdles. Not only was RFID technology in its infancy, but industry standards had yet to be established, forcing suppliers to learn best compliance practices on their own while taking a financial risk by investing in costly and untried technologies. Since then, however, both the RFID and retail sectors have matured, and Walmart announced in January of this year that it was embracing RFID once more (see Walmart Recommits to RFID and Walmart Tries RFID Again). That announcement was a cautiously exciting one, leading many to speculate about which retail chain would be the next to take the plunge.

Well, this past week, fashion retailer Nordstrom became the latest retailer to mandate that suppliers apply tags to the goods they provide to its stores (see Nordstrom Issues Supplier Mandate for RFID Tags). Nordstrom follows in the footsteps of not only Walmart but other major retailers as well that have issued RFID mandates in the past two decades. These include Marks & Spencer (see Learning from Marks & Spencer), Macy’s (see Macy’s to RFID-Tag 100 Percent of Items), Metro (see Metro Pushes Pallet Tagging), Target (see Target Issues RFID Mandate) and Sam’s Club (see Sam’s Club RFID Mandate No Big Deal?), among others.

Nordstrom’s New RFID Mandate

The directive to suppliers includes RFID-ticketed products for all of Nordstrom’s channels. RFID-ticketed products are not yet being required for dropship suppliers, a fulfillment method by which a retailer does not stock the goods it sells, but rather buys products from third-party companies (wholesalers, manufacturers, other retailers, etc.) and has those businesses ship the purchased items directly to customers. Reporter Claire Swedberg, in an article for RFID Journal covering Nordstrom’s mandate, noted:

“With more brands and manufacturers applying RFID tags to their goods to meet retailer mandates, technology companies and some retailers are trying to create a path for a return on investment for those suppliers. Some are leveraging RFID data to improve workflows and supply chain visibility. However, says Steven Davidson, FineLine Technologies’ senior VP of global sales retail, “Retailer mandate compliance is still the primary driver for most retail suppliers to implement item-level RFID tagging.”

– Claire Swedberg, Reporter for RFID Journal

With that in mind, RFID Journal has added a new track, Complying with Retailer RFID Mandates, to the conference program for RFID Journal LIVE! 2022, being held in May. The track’s educational sessions, designed specifically for suppliers being asked by retail clients to put RFID tags on their products, will feature speakers from Collaboration LLC, Auburn University’s RFID Center, GS1 US and Kontoor Brands (see New Education for Suppliers Facing Retail RFID Tagging Mandates). There are many issues on which suppliers need to get up to speed quickly if they are to comply with Nordstrom and Walmart, and this track is intended to help them achieve that goal. Retailers and their suppliers are thus advised to attend the event.

Predictions for Future RFID Adoption

Nordstrom was not the first retail giant to mandate that suppliers embrace radio frequency identification, and it won’t be the last. Technology adoption trends, as with many aspects of life, tend to proceed like a game of dominoes. If you push a tile near the end of the line, only a couple others will move. If you touch one near the middle, the result is a larger number of dominoes being affected, but others stubbornly standing still. But when you choose the tile in the front position, most—and if you’re lucky, all—of the others will fall in line and follow the lead domino in its forward motion. It’s simply a matter of momentum.

It’s hard to say yet whether this will be the case with RFID. A set of dominoes, after all, costs considerably less than a company-wide RFID-tagging solution, and the stakes are a lot smaller. But when large companies take a bold action, others observe the results and, like dominoes, often follow suit. I’m reminded of a commercial from my childhood for stock brokerage firm EF Hutton (thankfully archived on YouTube), in which the mere mention of the company caused others to stop whatever they were doing and eavesdrop, hoping to catch a good stock tip. “When EF Hutton talks,” the announcer intoned, “people listen.” Well, when the likes of Walmart and Nordstrom talk… people listen.

Retail RFID supplier mandates are like a game of dominoes, with each tile representing another company following the actions of those that came before it, and in turn inspiring the next one to do the same. Which will be the next retailer to fall in line—and what will be the next industry to follow retail’s example? Walmart and Nordstrom are talking. It’ll be interesting to discover who is listening.

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