Most of the nation's major retailers agree RFID is paramount for their futures, especially as a method to put pilferage in check, streamline the process of getting items to the shelf and reduce out-of-stocks. There is another application cropping up too - RFID for payments.
However, implementation remains slow for many chains. There are many questions swirling around the topic and many were addressed at RFID World, a meeting held in March in Dallas. Does RFID really cut down on out-of-stocks? Is there an adequate return on investment? Is there a threat of the invasion of shoppers' privacy? Many vendors are introducing products they hope cure the ills of RFID.
Target, Albertsons and Wal-Mart have been singled out as leaders in retail adoption. Wal-Mart, in fact, has put pressure on its vendors to be RFID equipped.
However, on the other hand, the retail giant had hoped to have 12 of its distribution centers using RFID by the beginning of last year, but to date the company reports five are up and running.
Like UPC codes, retailers are waiting for leaders such as Wal-Mart to do all the homework and then others will follow. The biggest problem, according to several chain executives, is learning how to harness the RFID information. One chief executive officer equated this to the implementation of scanning. At first, chains merely used it to move people through checkouts faster, until they understood how to manage and use the wealth of data.
A study by the Retail Systems Alert Group shows that 44 percent of manufacturers have developed timelines to implement RFID. Only nine percent of retailers have done the same.
Another obstacle has been security fear. Recently, a security expert cracked into passport information in the United Kingdom via RFID used to store personal information. In stores, RFID signals can be picked up 20 feet away, opening up the threat that people's personal shopping habits could be invaded. There have also been reports that RFID viruses could be developed making tags vulnerable.
Some RFID suppliers are so frustrated with retail's adaptation of the technology that they are looking for other avenues for growth. Some are pursuing other industries, such as travel; others are adding features for retail, such as payment options. RFID-enabled payments are expected to grow and retailers are on the lookout for roadmaps to integrate the systems. According to a study from the Aberdeen Group, there are more than 20 million RFID-enabled American Express, MasterCard and Visa credit and debit cards in the U.S. Studies of retailers accepting this form of payment said it shortens checkout time, but like scanning in early days, the data captured is not being used to analyze shoppers. The study found almost 60 percent of retailers said they plan to add this form of payment within the next 24 months.
Discussion Questions: What is the future for RFID? Will it deliver on its promise? Will enough retailers implement it to make a difference? What are the obstacles?