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Canada:Retailers take RFID reality check |
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2004-11-17
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A study on implementation of RFID (Radio Frequency Identification Devices) revealed that Canadian retailers plan on deploying the technology, many other are not in the hurry to do so.
Among the interviewed 30 respondents retail and consumer product companies, in the Deloitte Canada''s 2004 RFID study, half said they will implement RFID in the next two years, while 29 per cent planned on three to four years.
The RFID retail revolution will happen in Canada, said Christian Stephan, a partner in Deloitte Canada''s consumer business group, but that doesn''t mean that Canadian retailers really know what they''re getting into.
As per the study, 73 per cent of companies interviewed are aware of the technology, but only 23 per cent said they were ‘very’ familiar with the technology. Other 43 per cent said they are "somewhat" familiar with it.
"It''s more a question of ''when'' than ''if.'' In the U.S. . . . they''re doing it. I think everyone else is kind of sitting on the fence," said Stephan.
RFID promises real-time tracking of items through the supply chain. What Bar codes lack is limited by the amount of useful information they can encode. They also require line-of-site scanning, which for radio frequency technology is inconsequential.
Wal-Mart and Target have taken the lead among this retailer segment of companies put RFID on the ultimate test. The retail giant has mandated that its top 100 suppliers become RFID-compliant in 2005 with smaller suppliers to follow in 2006. Wal-Mart has been conducting trials in the Dallas area this year with HP, Johnson & Johnson and Kraft Foods, among others. Wal-Mart Canada did not return calls for comment at press time.
Target, has announced plans to go ahead with its own strategy, but many Canadian retailers are hanging back to see how the situation develops.
Caroline Casselman, a spokesperson for Canadian Tire said, "Our approach is that we''re going to monitor its use in other businesses and if we can pull together a business case that entices us to consider its use, we will pursue that."
A spokesperson from Future Shop said "they''ve looked into it," but wasn''t aware of any pilot programs in place or solid plans to adopt RFID.
Hudson Bay Co’s Steve Boily, director of enterprise architecture, declined to comment on the specifics of his company''s RFID strategy, but indicated that the interest is definitely there.
"I think a lot of retailers have got a fast follower strategy," he said. "Once the reliability of the readers, once the cost of the technology hits a certain threshold, once they see Wal-Mart and a critical number of suppliers doing it, then they''ll all jump on the bandwagon."
The economics behind RFID seems to be the stumbling block for companies around the world. Estimates place the cost of RFID tags anywhere from a quarter to a dollar.
Placing a tag on a whole pallet of goods may make sense, said Stephan, but not on individual lower-cost items. A can of pop, for example, is worth less than an RFID tag. The technology would have to cost a penny or less for it to be feasible.
It''s not only the cost of the tags, said Stephan, but the readers, the software, the middleware and the integration necessary to hook it up to existing retail technology.
"I think there''s still some things that have to be worked out with RFID," said Boily. There are issues around standardization, for example. Class 0 tags are factory programmable, Class 1 tags can be programmed at various stages along the supply chain, and Class 2 tags will be able to hold more data.
"It''s hard for people to deploy on something that hasn''t been defined yet. Nonetheless, Wal-Mart, Target, IBM and some others have been working on it. I think they''re working out a lot of the issues," he said.
Invasion of consumer privacy is another area for concern around RFID, which have yet to be resolved. Consumer buying habits would be under direct purview for marketer and retailers who could take advantage from the technology. Stephan dismisses such Big Brother scenarios, saying that RFID tags are more useful to retailers as a way to cut down on in-store theft.
Stephan contends that widespread deployment of RFID is probably five years away. Boily points out that bar code technology took more than a dozen years to truly take hold after it was first introduced. But with stakeholders like Wal-Mart taking an active interest, RFID may as well be on a fast track of global approval. |
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