Article
RFID comes out of the warehouse
The technology has made news by pulling duty in the backrooms of major retailers. Is it finally ready to meet some customers on the sales floor?
June 21, 2005
After several years of retail industry and media attention focused on Wal-Mart and its effort to use radio frequency identification to streamline its supply chain, several companies are trying to put RFID into the hands of the consumer—literally.
Inventory tracking continues to be the dominant use for RFID among retailers, but experts predict the technology soon will be the cornerstone of an interactive shopping environment.
Those same experts say, however, that it could be years before such technology becomes commonplace on the sales floor.
Two pioneers in the field of consumer-application RFID are Lincoln, Neb.-based Nanonation and GFX Dynamics, based inGrayslake ,Ill.
Although the companies' approaches vary slightly, both have created systems in which RFID tags are placed on products and when those products are picked up by a shopper, specialized messages appears on a nearby digital display.
"We decided that we wanted to make content more relevant to consumers through discrete input," said Bradley Walker, chief executive of Nanonation. "Rather than going to a kiosk and inputting data to come up with the information you need, customers simply pick up the product they are interested in and are given more information about it."
One of the displays Nanonation has unveiled at trade shows in recent months is designed for the shoe industry. When a particular shoe is taken from a rack, information about it is presented immediately on an LCD screen above the rack.
While Nanonation approaches RFID-enabled digital displays from a kiosk perspective, Alan Brask, a vice president and general manager at GFX — a company with roots in retail graphics — said his company considers their applications to be more in line with high-tech signage.
"We approach it from a mindset more of graphics," he said. "We try to fit the display in with the existing merchandizing or signage."
GFX is touting a prototype three-tiered table that, for example, can help market clothing. When a shirt is picked up, a double-sided LCD screen gives the customer information about it, including pictures of the item in other available colors.
Brask is quick to point out that the digital displays his company has developed are far different from the bank of television screens that have been around for years at department stores and other retailers.
"When you have screens hanging on a back wall, that is really counter-intuitive because it takes the customer's eye away from the merchandise, which is the last thing you want," Brask said. "You want to bring the customer into the shopping experience, and that is exactly what this technology does."
What makes these RFID applications unique, according to Brask and Bradley, is the specificity of information that appears on the screen.
"From the retailers we've surveyed and the research we've done, we feel very strongly that looped content on televisions becomes audio and visual noise for the consumer," Brask said.
"But with triggered content, which is what we call this, the information matches the specific interest of the customer. Triggered content really catches a shopper's attention and speaks to them about a product they have already shown interest in."
While the future looks bright for RFID on the sales floor, David Hogan, chief technology officer of the National Retailers Federation, cautions that implementation costs likely will take years for most retailers to overcome.
"From a consumer's perspective, there are a lot of things going on that are very exciting, but there are still some high costs associated with them," he said. "I think we are still several years out in terms of seeing some of these applications in stores, and in terms of mass adoption, let's talk in about 2010."
Bradley said one advantage of his company's RFID application is that it would not necessarily mean tagging every item.
"In terms of RFID adoption, it doesn't involve gathering consumer data and you do not need to undertake the cost of putting RFID tags on every product for it to be effective," he said, noting that only sample products could be fitted with tags to give consumers information.
Bradley said another advantage is that the technology can be used to provide information on new products or ones that are difficult for consumers to understand.
"We see the primary promotional applications being new products and complex products," he said. "With turnover of sales associates, getting a clear explanation of new technology can be difficult for consumers."
While Bradley and Brask declined to name clients, they said their respective companies soon will announce partnerships with retailers.
"We expect to have something in the pilot stage within 60 days, and we are working with some very recognizable names," Brask said.
Another challenge for companies such as Nanonation and GFX is to open the minds of retailers to the potential for consumer-level RFID applications. Today, when retailers think of RFID, the first thing that comes to mind is inventory control.
"What we are really seeing is more back-end with the supply chain," Hogan said. "From the manufacturing plant to the distribution center, and from the distribution center to the back of the store—that's where we are seeing RFID today."
Brask said reaction to his products from tradeshow attendees makes him optimistic that retailer adoption of them is imminent..
"This technology has spoken to retailers almost on an emotional level. They really get it," he said. "I think someday the retail environment will be almost completely interactive, and RFID will be at the center of that."
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