Understanding the value of integrated RFID systems: a case study from apparel retail

This contribution is concerned with the business value of Radio Frequency Identification (RFID) technology in retail. We present a case study of an RFID project at Galeria Kaufhof, a subsidiary of Metro Group and one of the largest department store chains in Europe. The project encompasses a variety of RFID applications at the intersection of store logistics and customer service. The contribution that our study makes to the literature is threefold. First, we describe an innovative large-scale trial that goes beyond what was done in earlier projects in several respects. The most fundamental difference from previous trials is the full integration of RFID event data with point-of-sale (POS) and master data, which for the first time offers the retailer the opportunity to directly observe and analyse physical in-store processes. Second, the heterogeneity of RFID applications implemented by Kaufhof allows us to theorise about the effects that RFID may have on business processes from an IT value perspective. We develop a conceptual model to explain the different cause-and-effect chains between RFID investments and their impact on firm performance, the role of complementary and contextual factors, and the difficulty of assessing these impacts using objective performance measures. Third, we compare the case to a prior trial conducted by Kaufhof about 5 years earlier. The differences between the lessons that the company learned in the two projects illustrate the impact of technological advances and standardisation efforts in recent years on managerial perceptions of RFID business value, which allows for the derivation of a number of useful implications for practice.