The marketing benefits of adopting radio-frequency identification (RFID) tagging technology at the individual product level will match or exceed the warehousing and stocking cost-reduction benefits, concludes a new study from DePaul University’s Kellstadt Graduate School of Business in Chicago.

“Adoption will occur far faster than expected due to the economic benefits and the new technology for producing RFID tags,” says Patrick Yanahan, President of USA Strategies, a study sponsor.

The history of the development of the UPC bar code was used to predict the adoption rate of RFID at retail for individual product identification.

The study found striking contrasts between the initial adoption of the original UPC bar code and the expected adoption of RFID tags on each package in the store. The study determined that:

• The cost of the tag was not the barrier to adoption time. More significant was the infrastructure required to get scanners and software systems installed in stores.

• The benefits to in-store merchandising, dynamic pricing, and electronic couponing will be the true pluses of RFID technology.

• Retailers will benefit from expanded marketing information, real-time merchandising capabilities, and express checkout services from RFID tags at the unit level.

• RFID tags will reduce in-store out-of-stocks.

• Improvements in margins and product turns on the shelf will be made through both merchandising and improved communications with consumers as they make purchase decisions.

“This is going to be an exciting example of how technology developed for one purpose will turn into a significant marketing tool,” says Henry Rodkin, Executive in Residence at DePaul, who directed the study.

For a copy of the study, contact Patrick Yanahan.