With inventory shrinkage still a major problem and omnichannel pressures growing, RFID could be a powerful enabler.
New Delhi: In a retail landscape defined by razor-thin margins, hyper-competition, and rapidly rising customer expectations, Radio Frequency Identification (RFID) has been hailed as a game-changing technology. It promises everything from inventory accuracy to faster checkouts and an even better customer experience. Yet, in India, a market known for its tech leaps, such as UPI and e-commerce, RFID adoption remains conspicuously slow.
IndiaRetailing has consistently highlighted RFID’s immense potential in revolutionising inventory management. However, several factors still hinder its large-scale rollout:
Key Hurdles:
- High Costs & Inconsistent Tag Quality: RFID can streamline audits, but tags are often damaged during garment handling, leading to inconsistent tag quality. Integration costs and weak vendor support add to the burden.
- Operational Limitations: RFID scanners often pick up signals from nearby products, causing system mismatches. Metal racks, jewellery items, and tag placement further complicate scanning.
- ROI Concerns: Unaffordability of tags for smaller brands. While larger retailers can absorb costs, inconsistent vendor support stalls scaling.
Not Just a Tag—A Transformation
“RFID is not a tag you stick on—it’s a business transformation,” says Kunal Mehta, Chief Information Officer (CIO), Arvind Fashions. “Most failures happen not because of the tech, but because the business wasn’t ready.” For a country where formats are fragmented and inventory often flows through chaotic supply chains, that readiness, both cultural and operational, is a work in progress.
Avery Dennison, one of the few RFID solution providers with global heft, believes the Indian market is just warming up. With local manufacturing underway and costs of tags falling below Rs 5, they’re bullish. But adoption, they admit, takes time—“two to three decades,” by global benchmarks.
The Margin Trap
Ramyaraj Rath, Chief Merchandising Officer, Style Baazar, minces no words when he says: “You can’t pitch RFID to ‘Bharat’ with the same lens as ‘India’. When 40% of our SKUs sell at Rs 199, a Rs 5 tag is a dealbreaker.”
For value retailers like V-Bazaar and Style Baazar, where average selling prices (ASPs) hover low and SKUs run into tens of thousands, the economics are brutal. “We need RFID at Rs 1 or less,” says Rath. “Until then, it’s not viable.”
Even Spykar, one of India’s top denim brands, has held off. Rupendra Nigam, Head of IT, explains: “Denim is RFID-friendly, but when you add Rs 6 to an undergarment or Rs 100 to a product, you’ll only recover Rs 70 from after returns and discounts, it just doesn’t make sense.”
ROI: Real or Mirage?
Sandeep Agarwal, AVP at Wow! Momo asks the question on everyone’s mind: “If RFID can solve 15% revenue loss due to shrinkage, overstocking, and stockouts, why haven’t we all adopted it?”
The answer lies in complexity.
RFID works when it’s embedded end-to-end—from manufacturing to returns. Pilots often fail because retailers focus narrowly, ignoring upstream issues or third-party logistics bottlenecks. “You can’t fix an external supply chain problem using only internal tools,” warns Mandavi Singh, AVP, Digital & Information Technology, Shoppers Stop.
Moreover, use cases vary drastically by retail type. Shoppers Stop found that RFID didn’t work across certain categories or supply formats. “We need volume-based benchmarks,” Mandavi says, “and templates that reduce friction.”
Soft vs. Hard Tags: A Costly Lesson
One of the most contentious points was tag choice. Vikash Kumar, CIO, Style Baazar, raises a dilemma many retailers face: go with reusable hard tags to cut recurring costs, or opt for soft tags that unlock richer insights?
Soft tags, it turns out, are winning the global debate. “Even Zara dropped hard tags after a decade,” a panellist noted. “Soft tags offer benefits beyond inventory, like sales uplift and consumer insight.”
The Real Bottleneck: Mindset, Not Technology
Surprisingly, tech wasn’t the top hurdle. “People resist change,” says Ramyaraj. “Even legacy systems get defended.” Others pointed to finance teams as silent blockers. “CFOs kill more RFID dreams than anyone else,” joked one executive.
But as Bhavprita Harshawardhan of Avery Dennison puts it, “Visionary leadership is what pushes tech forward—not market readiness alone.” She likens RFID’s early struggles to barcodes and QR codes, once doubted, now ubiquitous.
Why India Needs Its First Success Story
Only Zudio has managed an at-scale RFID rollout in India so far. Others are cautiously observing, waiting for a playbook. But that, experts warned, could be a mistake.
“This isn’t plug-and-play,” says Rajgopal Nayak, ex-CTO of Metro Brands. “It’s a child—it needs nurturing. You need to rewire people, processes, and mindset.” From fitting room tech to omnichannel inventory sync, the promise is real. But so is the challenge.
The key, explains Kunal, is transparency: “The industry needs to talk more about what didn’t work. That’s how we’ll build real trust and momentum.”
Where Do We Go From Here?
India doesn’t lack the ambition—or the need. With inventory shrinkage still a major problem and omnichannel pressures growing, RFID could be a powerful enabler. But unless pricing aligns with value retail realities, infrastructure catches up, and business cases are shared widely, the technology risks remaining an elite feature in a mass-market economy.
Until then, India’s retailers remain caught between aspiration and affordability, waiting for the tipping point that turns potential into practice.
With inputs from a recent roundtable powered by Avery Dennison and presented by IndiaRetailing at the Phygital Retail Convention 2025
