RFID Coming on Strong

Since reporting in this column last August on Wal-Mart's announcement that it was requiring its top 100 suppliers to implement RFID at the pallet and carton level, RFID has become the topic du jour and the proposed panacea to a sea of industry supply chain inefficiencies.

It's also being hailed as a revolutionary technology that will change everything from the consumer shopping experience to the science of weather forecasting. Last month's article in Scientific American entitled "RFID: A Key to Automating Everything," reports on current applications of RFID, from its widespread use in automatic toll systems (readers scan RFID tags attached to car windshields, automatically deducting the fee and raising the bar) to its less ubiquitous usage as an anti-kidnapping device (tags the size of a grain of rice are embedded below the surface of a child's skin).

Looking to the near future, the article predicts that "smart shelf" technology will come on strong. Further down the road, it anticipates a wide range of uses for the technology, from RFID networks that measure the stresses on bridge structures to applications that assist Alzheimer's patients with maintaining their independence.

It may be too soon to say, but signs suggest that the buzz surrounding RFID is not just hype, and that this is no flash-in-the-pan technology.

The possibilities of RFID are limitless and thrilling, and attending the National Retail Federation's (NRF) Big Show last month made it clear that, indeed, they are also not just theoretical. At METRO Group's "Future Store," located in Rheinberg, Germany, and reproduced in part in a 14,000-square-foot space on the show floor, shoppers are exposed to a wide range of technologies that make their experience better and improve the store's ability to track and replenish inventory and please its consumer at the same time.

In its Future Store, METRO, the world's fifth-largest retailer, has implemented everything from "smart scales" that can identify what fruit they are weighing to the aforementioned "smart shelf" technology. The latter uses RFID to track when a product is removed and automatically delivers that information to the back office. METRO is partnering with Gillette, Kraft and Procter & Gamble in this initiative, but CIO Zygmunt Mierdorf notes that the company is working to implement item-level tagging with some of its fashion apparel. (Lest you worry about privacy concerns, the company has installed a deactivator at the exit of the store to "kill" the identifier code in each tag.)

Moreover, at its sister store, apparel retailer Kaufhof, the company is already tracking apparel at the item level with vendor Gerry Weber.

Like Wal-Mart, METRO announced that it would begin using RFID to track inventory at the pallet and carton level with its top 100 suppliers. METRO's goal is to achieve this rollout of RFID within its Germany-based distribution centers by Nov. 1.

This technology is happening, and apparel is just one of the industries it will likely transform. As writer William Atkinson reports in his comprehensive piece on RFID in this issue, Web-based RFID could allow authorized users to have real-time, high-detail visibility into the movement of goods throughout the apparel supply chain, from raw materials suppliers to logistics providers to the retail store.

Inside the retail store, the anti-theft and inventory-tracking advantages of item-level tagging alone would be revolutionary, but this technology has other far-reaching potential benefits that could provide a never-explored look into the mind of the consumer. Imagine being able to track and trace the movement of product around your store before it reaches the point of sale.

Jim Brodzik of Checkpoint Systems explains that item-level tagging could allow a retailer not only to know what sold, but also to know what was taken off the shelf, and what put back. Or, alternatively, to know what was brought into a dressing room, and what returned to the shelf. A retailer could track, for example, the fact that red sweatshirts are consistently taken off the shelf and to the dressing room, but that the blue ones are ultimately the ones purchased, suggests Brodzik.

Akin to what some e-tailers are trying to do with respect to tracking "shopping cart abandonment" on their online stores, the ability to track the movement of goods in this manner would allow apparel companies to have insight like never before into the shopping patterns of the consumer, and allow retailers to understand and cater to consumer desire at a whole new level.

METRO's Mierdorf calls RFID the "technology that will make a quantum leap for industry."

I, for one, wouldn't bet against him.