News and Views
 

- September 5, 2007 -

 

From RetailWire: Metro Goes to Full-Scale RFID Deployment

 
  Will Mandated Compliance Motivate Others to Follow Suit?  
 

 

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Each business morning on RetailWire.com, retailing execs get plugged in to the latest industry news and issues with key insights from a "BrainTrust" of retail industry experts. Here are excerpts from one of these unique RetailWire online Discussions, along with results from RetailWire.com's Instant Polls.

 
       
   
     
 

By George Anderson, Editor-in-Chief, RetailWire

The Metro Group is taking its radio frequency identification (RFID) program past the test stage to full deployment at 200 locations. The company has made its seriousness known by mandating its top 650 suppliers be ready with a tag program by early next year.

Jonathan Collins, senior analyst with ABI Research, told RFID Update, that Metro is serious about compliance with its program.

"Metro is going to pass through the additional handling cost of an untagged pallet. Mandate compliance will be built in to the contractual relationship between Metro and each supplier," he said.

"This is a somewhat stronger step than we've seen from other high-profile deployments like Wal-Mart," Mr. Collins told RFID Update. "It is absolutely a statement of intention, and a serious one at that."

According to the analyst, Metro's move to full-scale RFID deployment will motivate others in Europe to follow suit.

"The Metro deployment is a good signal that a lot of the hurdles can be managed and that UHF RFID can be done. The reasons for thinking RFID is a better investment are becoming clear," he said.

"I think it's fair to say that in the first half of next year you will see other European companies making similar announcements. Maybe they won't have the same teeth as the Metro announcement, but they will certainly entail rolling out RFID in the supply chain."

Discussion Question for the BrainTrust panel: What will U.S. retailers take from the Metro RFID rollout? Will we see a full-scale deployment of RFID at Wal-Mart, Best Buy or other retail chain currently testing the technology in backrooms or other applications?

 

RetailWire Instant Poll Results:

RetailWire BrainTrust Comments:

Retailing economics in Germany and the U.S. have some significant differences, which might lead to substantially different RFID return on investment. German labor, transportation, warehousing, and real estate costs are much higher than the U.S., and gross profit margins are often higher, too. Since the cost of any new technology is highest at first, the first successful adopters should be the businesses with the greatest opportunity.

- Mark Lilien, Consultant, Retail Technology Group

RFID activity will increase tremendously in the pharma industry to meet the pedigree requirements of every state. As applications are invented and delivered to accommodate those requirements, more and more applications will be perfected. As applications and products are perfected, the cost will go down and adoption will become more cost efficient. Adoption for the electronics market for higher end merchandise, like that sold in Best Buy, is a no brainer. It is the CPG market that struggles for the ROI.

- Susan Rider, President, Rider and Associates, LLC

Retail Management Consultants President & CEO, George Whalin, Says :
In a world where suppliers of all kinds and sizes provide retailers with merchandise, mandating compliance is not only foolish, but totally impractical.

What do you say? Send us your comments here

It seems that Wal-Mart also told suppliers they had to be fully RFID compliant by a certain date. As we know, that didn't happen. It's easy to mandate such things but, in a world where suppliers of all kinds and sizes provide retailers with merchandise, mandating compliance is not only foolish, but totally impractical. I suppose we'll see if Metro can make it happen with their suppliers.

- George Whalin, President & CEO, Retail Management Consultants

High-end and consumer electronics retailers like Best Buy and Coach are now acting on RFID faster than those in the discount and food channels because there are loss prevention and warranty elements that are being combined with the tracking component of RFID. The drug and DIY channels will have to take the issue category by category, which should yield some great implementation lessons.

Interestingly, insurance, particularly car insurance, and health care are seeing plenty of advances around RFID. I don't see any US retailer moving to full deployment before the end of the decade, my forecast at the start of the RFID phenomenon, but Best Buy and a few others may be there shortly into the next decade.

- Ron Margulis, Managing Director, RAM Communications

It’s easy for us all to say something will happen but if you've ever worked within a retailer's walls, you realize how much change management a move like this will require. It simply must be proven out and prioritized to happen...and most retailers will wait for others to work out the bugs first.

- Laura Davis-Taylor, Founder and Principal, Retail Media Consulting

Read the entire story and RetailWire discussion at:

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12401

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