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Should retail stores also RFID-tag ‘cheap’ items?

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  • Piramuthu, Selwyn
  • Wochner, Sina
  • Grunow, Martin

Abstract

Despite their implementations in a wide variety of applications, there are very few instances where every item sold at a retail store is RFID-tagged. While the business case for expensive items to be RFID tagged may be somewhat clear, we claim that even ‘cheap’ items (i.e., those that cost less than an RFID tag) should be RFID tagged for retailers to benefit from efficiencies associated with item-level visibility. We study the relative price premiums a retailer with RFID tagged items can command as well as the retailer’s profit to illustrate the significance of item-level RFID-tagging both cheap and expensive items at a retail store. Our results indicate that, under certain conditions, item-level RFID tagging of items that cost less than an RFID tag has the potential to generate significant benefits to the retailer. The retailer is also better off tagging all items regardless of their relative price with respect to that of an RFID tag compared to the case where only the expensive item is RFID-tagged.

Suggested Citation

  • Piramuthu, Selwyn & Wochner, Sina & Grunow, Martin, 2014. "Should retail stores also RFID-tag ‘cheap’ items?," European Journal of Operational Research, Elsevier, vol. 233(1), pages 281-291.
    • Handle: RePEc:eee:ejores:v:233:y:2014:i:1:p:281-291
    DOI: 10.1016/j.ejor.2013.08.051
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    References listed on IDEAS

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    Cited by:

    1. Nikola Milicevic & Aleksandar Grubor, 2015. "The effect of backroom size on retail product availability – operational and technological solutions," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(39), pages 661-661, May.
    2. Wei Zhou & Selwyn Piramuthu, 2017. "Identification shrinkage in inventory management: an RFID-based solution," Annals of Operations Research, Springer, vol. 258(2), pages 285-300, November.
    3. Rekik, Yacine & Syntetos, Aris & Jemai, Zied, 2015. "An e-retailing supply chain subject to inventory inaccuracies," International Journal of Production Economics, Elsevier, vol. 167(C), pages 139-155.
    4. Fombelle, Paul W. & Voorhees, Clay M. & Jenkins, Mason R. & Sidaoui, Karim & Benoit, Sabine & Gruber, Thorsten & Gustafsson, Anders & Abosag, Ibrahim, 2020. "Customer deviance: A framework, prevention strategies, and opportunities for future research," Journal of Business Research, Elsevier, vol. 116(C), pages 387-400.
    5. Mou, Shandong & Robb, David J. & DeHoratius, Nicole, 2018. "Retail store operations: Literature review and research directions," European Journal of Operational Research, Elsevier, vol. 265(2), pages 399-422.
    6. Aiello, Giuseppe & Enea, Mario & Muriana, Cinzia, 2015. "The expected value of the traceability information," European Journal of Operational Research, Elsevier, vol. 244(1), pages 176-186.
    7. Wei Zhou & Selwyn Piramuthu, 2018. "IoT security perspective of a flexible healthcare supply chain," Information Technology and Management, Springer, vol. 19(3), pages 141-153, September.

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