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Canada
: Retailers take RFID reality check
16th November 2004
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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