After the initial excitement died down, RFID didn’t deliver on its early promises. However, it is steadily attracting attention once again. Joanna Perry asks what retailers are spending money on

The hype for the adoption of radio-frequency identification (RFID) has well and truly come and gone. Many retailers groan at the mere mention of those four letters and it’s a groan that turns to laughter at the suggestion that they might invest in RFID technology.

Yet the market has far from ground to a halt. It’s true that few retailers are embarking on the larger-scale projects undertaken at Wal-Mart and Metro, which have been able to use their relative power with suppliers to mandate that they get involved with the business of tagging.

However, although they are making the news much less, there are other pilots of RFID technology under way and they are much more likely to be expanded to wider deployments than the trials undertaken three years ago.

The Bridge project (Building Radio Identification for the Global Environment) has brought large retailers, manufacturers and technology suppliers in Europe and China together on a three-year project. In the next year it will be working on pilots and business cases.

Standards body GS1 is one of the organisations involved with Bridge. GS1 UK EPCglobal David Lyon says that the project is making headway through its work with European retailers. He explains: “A pilot has been created within Bridge, focused on textiles and apparel, driven by El Corte Ingles, Carrefour and German department store Kaufhof, which is using smart shelves and tables for increased on-shelf availability.

It builds on what Marks & Spencer has achieved with tagging in stores.”

However, he adds that retailers aren’t – and shouldn’t – wait for Bridge to publish the findings of the trials that it is involved with before embarking on their own projects.

Rather, what’s happening is that they are creating business cases for closed-loop applications, often without any input from partners further up the supply chain.

Testing, testing
German department store chain Karstadt will use item-level RFID in a pilot that is due to go live before the end of August. It is designed to create an accurate picture of stock levels. If the pilot is successful, Karstadt plans to introduce the technology in all stores.

The pilot will focus on a full range of denimwear at one branch. Stock location data – collected
using RFID chips attached to labels on each pair of jeans – will be used to update Karstadt’s stock management system. Store staff will be able to see at a glance how much stock is on the shelves and also in the store room.

The project has three main aims: to prevent out-of-stock situations; enable price changes to be made more quickly; and replace the annual stock take. The idea is that if these aims are achieved then a suitable return on investment will be possible.

To avoid any privacy concerns, which has been an issue in Europe and is something that the EU is still investigating, the chip will be removed from the item at the till. Karstadt’s customers will also be advised that the technology is in use at the store.

Item-level RFID can also add intelligence to existing product security systems and especially to target internal shrinkage where products ostensibly pass through the tills.

ADT vice-president of retail sales in Europe, the Middle East and Africa John Smith says that his company is talking to one food retailer about a closed-loop RFID application to help prevent the millions of pounds of losses it suffers through collusion. Information on the tag would be picked up and reconciled by the EPoS system, to ensure that the right amount has been charged for that particular product. Only when the EPoS system has recognised that the goods have been paid for would permission for the tag to be removed be given.

Checkpoint Systems UK managing director David Nuttall also believes there is value in using RFID to make standard security tags intelligent. Checkpoint is working on a trial with House of Fraser, which uses hard security tags on a lot of the goods it sells. For its high-value items, Checkpoint has linked an RFID chip to a hard security tag and barcode.

The RFID tag must be scanned at the tills before it will allow the hard tag to be detached.

Tesco, previously one of the UK RFID industry’s great hopes for proving the value of the technology, has been much quieter on the subject of late. The talk of an enterprise-wide RFID roll-out across Tesco’s supply chain has died down. However, it still has projects under way.

Smith explains that Tesco is running a trial at a distribution centre and 16 shops in Northern Ireland in to track cages of non-perishable items being delivered to stores.

Another project in France by French pharmaceutical distributor Cerp, uses RFID to track deliveries of trays of drugs to 250 retail pharmacies.

Aldata business development manager Paul Close explains that Cerp uses smart tracing with RFID tags attached to plastic trays that orders are sent to the pharmacies in. There is also an RFID tag at each pharmacy and in the delivery vans, so drivers can update Cerp’s systems on the whereabouts of each tray by using hand-held terminals.

“With RFID, Cerp knows what trays are out with which pharmacies. It can see the stock in the pharmacy and so it believes it has a complete logistics loop,” says Close.

The tags can be written to – as well as read from – so when a tray is returned to the distribution centre, its RFID tag is wiped clean of data, ready to be rewritten once the tray is filled with products again.

Probably the most well-known
UK example of RFID in retail is at M&S. The high street giant has continued to expand RFID pilots for its fresh food and menswear ranges, but the company chose a proprietary system, going against the belief of many within the RFID industry that standards-based systems are the way forward.

BT Auto-ID chief operating officer Tom Williams says: “When M&S went forward with RFID on food and garment tracking, it did so because it suited its business needs. It didn’t do it for the benefit of anyone else, so it didn’t use the EPCglobal standard, because it didn’t need to.”

He adds that M&S’s general merchandise RFID project has been successful because “they did not try to boil the ocean”. Just as for the other projects mentioned, RFID is being used to solve specific business problems, rather than introduced to see what it can do. Williams explains: “Rather than change their whole system, they decided to use RFID to count clothes and then update their systems.”

Nuttall points out that, in the long term, M&S will suffer if it sticks to proprietary RFID technology, because the costs will fall for standards-based RFID technology as adoption rises.

However, M&S is investigating its options. Nuttall says that Checkpoint is talking to the retailer about ticketing for its Per Una range and wants to understand Checkpoint’s strategy for its products in relation to RFID.

Standardising RFID
The importance of the ratification of standards by EPCglobal is that retailers can begin to deploy systems, whether they can get suppliers on board at the moment or not. Further down the line, this will make involvement of firms further up the supply chain easier.

Lyon explains: “With EPCglobal, there is a philosophy that by using the tag, reader and corporate information systems, data will be shared between trading partners.”

However, he admits that this must be viewed as a longer-term goal. “There are few instances where RFID data is being aggregated and shared,” he says.

Williams expands on this. “The biggest challenge is that retailers get all the benefits, but they get suppliers to pay the costs. With Wal-Mart, the suppliers were mandated to do something and only now are they seeing how they can extract benefit from RFID themselves. To progress further people need to look at active communities of interest,” he says.

The big boys of the RFID world are certainly continuing to make progress with standards-based RFID technology. Intermec business development manager Craig Backham says: “We have worked with Metro on various pilots for pallet tracking and then case-level tracking. We are rolling out 130 portal readers to its cash-and-carry business in Germany by September.”

Metro is also working with supply partners in the Far East, on a project called Tag It Easy, to identify how they can make use of the technology for the benefit of all.

Smith concludes that good news in the near future is likely to continue to be focused on closed loop applications. He says: “While some retailers have risen to the challenge and identified a return on investment for RFID, not a single one has announced a return on investment on supply chain RFID applications.”