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Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Radio Frequency Identification (RFID) technology has a million applications, but is Retail one of them?

cartoon of F1 driver in shopping cart

A promising history

About 10 years ago, RFID technology promised to make these dreams a reality for both customer and retailer. But was the whole idea a cruel fad based on vendor over-promises or will it actually one day deliver on the hype? RFID has long had a raft of uses outside of the retail industry – it is used to monitor athletes in a marathon, protect nurses in psychiatric hospitals, provide access to residents of gated communities, and find lost pets.

Retail was going to be RFID’s next big thing. Huge American retailers like Walmart and Macy’s began pilot testing RFID several years ago for inventory tracking.

But there were problems. The cost of implementation and the tags themselves. In low-margin retail operations like groceries, a tag that costs even 10 cents would still extinguish any margin the retailer had.

“To be used at the item level in food retail, the price of the tag has to come down to the level of the common old barcode, which is to say virtually zero,” explains Roger Whyborn, managing director of Protrac iD, a Brisbane-based firm that designs and manufactures RFID technology. “And that isn’t going to happen anytime soon,” he says.

“There are some other big problems too. Metals interfere with RFID signals, so if you stick an RFID tag on a can of beans you are going to get poor results,” Whyborn says. But, he adds, “For higher margin retail operations, like clothing, it’s another matter. RFID can be very effective”.

The technology makes precise inventory management possible.

- Michael Baker, retail expert

Retail RFID

Protrac iD services a whole swathe of applications, including regulation of food temperature, occupational health and safety, security systems for gated communities and even prisoner tracking systems. It has some illustrious customers too, including Facebook’s Mark Zuckerberg for whose house in the US Protrac iD provided the access technology.

High-margin clothing retailer Macy’s is among those that has rolled the technology out across its US stores, believing it to be a powerful tool for ensuring it has the right stock for its customers. A number of Australian retailers are following suit, although they are more tight-lipped about it.

For some retailers there has been disillusionment over the past few years because of what Whyborn says were too many RFID vendors overseas who “overpromised and under delivered.” Companies invested serious sums of money in RFID systems that were never going to solve the kinds of problems they wanted it to.

So what about the dream of the frictionless supermarket checkout, courtesy of RFID? It will not happen without a significant lowering of the hardware costs and the successful elimination of the metal interference problem, but more modest applications of RFID in the retail store environment are certainly on the cards right now, with clothing retailers in the vanguard.

Verdict

Some of the more glamorous applications of RFID application mooted for the retail industry may well happen one day, but not soon enough to suggest retailers give up on intermediate solutions. But retailers with focused, realistic goals and a clear understanding of what the technology can do, may reap significant benefits from RFID in the shorter term.

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