Ask Colin Cobain, IT director at Tesco Stores - the UK’s leading food retailer - when he thinks item-level radio frequency identification (RFID) tags in store may transform retail activity, and he raises a hand to scan a metaphoric horizon: “It’s decades away,” he says, “the technology doesn’t even work with the bulk of our product assortment.”
And that, despite the hype from IT enthusiasts and much-publicised concerns by the privacy campaigners, is the problem. RFID tags are virtually impossible to read when affixed to metals, while liquids degrade the radio signal to such an extent that reading tags on anything from a bottle of shampoo to a litre of fizzy drink becomes a challenge.
”We’ll see widespread use of tags on high-value lines; where size and colour choices add complexity in stock management; on pharmaceuticals where counterfeiting is an issue; and for those items that are a security risk, all within a few years,” adds Mr Cobain, “but anything more than that is a very long way in the future.”
As with other leading retailers, Tesco is already well down the RFID route. Along with Wal-Mart in the US and Metro in Germany, it is asking many of its suppliers to start tagging cartons and outer cases of merchandise within the next year. “It’s not a mandate,” adds Mr Cobain, “we’ve just asked them.”
It’s an approach which Wal-Mart, the world’s largest retailer, is also adopting.
In Germany Metro, too, has asked its key suppliers to start carton-level tagging within the next 18 months. “By January 2006 we want to have 300 suppliers sending us tagged cartons and cases,” says Zygmunt Mierdorf, chief information officer, “and we aim to have all our distribution centres equipped with the necessary readers.”
But while the world’s grocers are focusing on carton-level tags to improve supply chain, RFID is seen by non-food retailers - which, of course, includes the likes of Tesco, Metro, and Wal-Mart - as a far more practicable option at item-level.
Joining Mr Cobain at a round-table discussion on RFID held at Retail Solutions 2004 - the UK’s leading retail IT event - in Birmingham earlier this month, was James Stafford, head of RFID developments at Marks Spencer. The company is running a five-store trial of individually tagged merchandise - mostly men’s suits and accessories - with encouraging results. “We know we can do RFID at reasonable cost,” says Mr Stafford, “and that there are significant improvements in product availability.”
M&S is using the tags for in-store stock control, scanning the highly visible six-inch long labels rapidly (around 700 lines in 30 seconds) at the end of each day to fast-track information about what is still on offer to the distribution centre and so improve overnight replenishment. By having more size choices available, the store has boosted sales considerably.
