RFID and the Grand Retail Vision


Chapter 8, "Real-Time Manufacturing," explored how RFID tags are being used throughout the manufacturing, logistics, and warehousing processes (the "supply chain") to greatly reduce costs and increase efficiency. As the price and size of RFID tags come down, they will start to appear on actual consumer goods, translating into cost savings and efficiencies for retailers as well. But there's another dimensionthe consumer dimensionwhere having products RFID-tagged can also add value if we as consumers wish to exploit the technology.

For retailers, the values include (but are not limited to) the following:

  • Decreased shrinkage at the retail level

  • Increased retail sales (fewer shelf stock outages)

For consumers, the values include the following:

  • Improved in-store shopping experience via RFID-enabled PDAs

  • Increased checkout speeds (nearly instantaneous)

  • Strengthened (or heightened) value in the home for locating and tracking products

Large retailers such as the Gap and Benneton have already done regionalized in-store field trials, embedding RFID tags into many lines of clothes and installing shelf-based RFID readers. An immediate return on investment can be realized simply by reducing the number of shelf out-of-stock situations (rapidly replacing items as soon as the shelf location for a given style and size is near empty). As importantly, RFID tags provide the retailer a tighter tracking mechanism against theft; many apparel retailers claim they loose between 10 percent and 25% of their inventory in the overall supply chain due to shrinkage.

The current cost of RFID tags varies, but falls generally in the range of 20 to 30 cents per tag (retailer cost). For this reason, they may only appear on the more high-valued retail items costing more than $10 for the next few years. As demand increases, the cost is expected to drop to 5 cents per tag, making them more cost-effective to deploy on many more less-costly items. Gillette alone ordered more than 500 million tags in 2004, and Benetton ordered 80 million.[1] Do not think tags are heading your way yet? Indeed, we will see RFID-tagged products in some of the largest retail outlets in the very near future. Wal-Mart has mandated RFID product tagging wherever practical by mid 2005.

[1] http://www.computerworld.com/managementtopics/ebusiness/story/0,10801,79286,00.html.

The consumer shopping experience is expected to improve notably as a result of RFID-tagged merchandise. Checkouts can be nearly instantaneous because RFID readers can scan all tagged items in a shopping basket or cart in seconds without any items needing to physically removed and handled. Similarly, the process of returning products is expected to be superior because the authenticity of the product and purchase can be immediately verified.

Some stores are conceiving and experimenting with both customer-owned and store-owned PDAs equipped with built-in RFID readers that could be "wanded" near an item to determine its price, whether it is part of a special in-store promotion, and whether it is connected to past or present tie-ins with other in-store promotions. Borrowing a trick from the online retailers such as Amazon, they can advertise directly to you; perhaps that blouse you picked out has a special promotional value given who you are and what else you're buying or not buying at the moment. As a consumer, you will be given the option (for privacy concerns) to share more, less, or none at all of your shopping experience with your retailer, but the more you are willing to share, the more they will reward you with conveniences and price.

Chapter 5, "Pervading the Home," discussed the values of having products with RFID tags in your house. Using them in conjunction with an appliance equipped with an RFID reader, you can determine the contents of your refrigerator or washing machine from any Internet device that can access your home network. This will allow for better home inventory tracking, better meal planning, and better outfit planning. From within a retail store, your PDA or cell phone will be able to query your home to find out whether you are out of milk and the actual waist size of that last pair of jeans you bought and whether you really have the right color of shoes for that skirt.

Boston Marathon

The Boston Marathon has been using RFID tags on sneakers for many years.[2] As runners pass various station points en route to the finish line, their status and time is immediately updated on a Web site for anyone to view. This nearly eliminates cheatinga notorious problem that occurs when runners mysteriously appear on the route close to the finish and cross the line barely breaking a sweat. For the legitimate runners who are forced to start literally minutes behind the starting line because of the size of the pack, the RFID tag trips a sensor at the starting gate that records their actual start time. As a result, runners get far more accurate "personal" times for the race.


[2] http://www.ti.com/tiris/docs/solutions/sports.shtml.

As the proliferation of RFID on retail products occurs, people and businesses will find creative ways to exploit the data in ways that were previously unanticipated. Tracking runners during a race certainly is one way. As for a more creative use, perhaps your waste management company will charge you a variable weekly fee based on refunding the number of recyclable containers it can detect in the garbage you take out to the curb. Perhaps airport and building security systems will automatically scan for dangerous or undesired articles entering their premises. Possibly, you will be able to find your golf ball easier in the rough. Or maybe your cell phone will be able to alert you if you open the incorrect prescription drug medication in the dark.

RFID tagging of consumer products is occurring now and will become more pervasive over a short number of years. Tracking these objects from their creation through to your last use can provide benefits to retailers and consenting consumers, both in store and at home and beyond. There are indeed some concerns about privacy and who will access and exploit this new data source. Will passers-by on the street be able to "wand" me with their cell phone as they pass and know the details of my attire? Then again, they are using their eyes today anyway, and furthermore could snap a cell-phone picture discretely. We, as consumers, may at first elect to have our tags "neutralized" upon purchase. Quite likely, however, over time, we will relax our worries much like we now think nothing of using a bank card in the supermarket, which clearly puts our name on that huge list of purchases.



    Inescapable Data. Harnessing the Power of Convergence
    Inescapable Data: Harnessing the Power of Convergence (paperback)
    ISBN: 0137026730
    EAN: 2147483647
    Year: 2005
    Pages: 159

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