The latest entrant on the technology front, Radio Frequency Identification (RFID), has the potential to become one of retail’s truly rare transforming technologies. Lately, in the realm of technology, there is always a “new thing” that is purported to have an exciting positive impact on the business. Historically, retailers have attempted the deployment of thousands of different technologies to improve their sales, margins and inventory productivity, mostly with marginal returns. The majority of these attempts have been oversold, ill-conceived, poorly executed, and far costlier than anticipated. There are a few notable exceptions that have had true and sustainable retail business impacts.

In the early sixties, retailers began to embrace the computer as a tool to automate mostly clerical and accounting functions, such as payroll and general ledger. The use of the computer, combined with emerging telecommunications, enabled the growth of national chains and an era of unprecedented retail growth and profitability. Some early adopters even began to use this new device to create a perpetual inventory in their warehouse, which led to another transforming technology (this time, software-based), automated replenishment. At the same time, other developers were inventing devices to capture information electronically at the point of sale, first using a keyboard, later via scanning. In the 1980s, the electronic exchange of information between retailers and suppliers (EDI) significantly changed the dynamics of the supply chain, speeding the flow of both information and products.

These technologies and a few more redefined the economics of retailing and enabled new, simpler methods of conducting business that were more precise, productive, and efficient. All had the ability to lower the labour component, improve inventory accuracy and turnover, and improve sales. Unlike many of the current fads in information technology, these transforming technologies are differentiated with measurable benefits and clear ROIs, as well as the ability to meaningfully change the operation of the retail business.