PILLAIS INSTITUTE OF MANAGEMENT STUDIES & RESEARCH

Sector 16, New Panvel East, Navi Mumbai 410206

MMS 2011-13

A RETAIL MANAGEMENT PROJECT ON

RFID

TAUGHT BY:

PROF. DR. AJIT PATIL

GROUP MEMBERS:

Imran Sayed (171) Ph: 9930888659 Arif Khan (137) Ph: 9664277786 Robin Palan (169) Ph: 9967850111 Parvez Naikwadi (154) Ph: 9967133348

EXECUTIVE SUMMARY Long checkout lines at the grocery store are one of the biggest complaints about the shopping experience. Soon, these lines could disappear when the ubiquitous Universal Product Code (UPC) bar code is replaced by smart labels, also called radio frequency identification (RFID) tags. RFID tags are intelligent bar codes that can talk to a networked system to track every product that you put in your shopping cart. Imagine going to the grocery store, filling up your cart and walking right out the door. No longer will you have to wait as someone rings up each item in your cart one at a time. Instead, these RFID tags will communicate with an electronic reader that will detect every item in the cart and ring each up almost instantly. The reader will be connected to a large network that will send information on your products to the retailer and product manufacturers. Your bank will then be notified and the amount of the bill will be deducted from your account. No lines, no waiting. RFID tags, a technology once limited to tracking cattle, are tracking consumer products worldwide. Many manufacturers use the tags to track the location of each product they make from the time it's made until it's pulled off the shelf and tossed in a shopping cart. Outside the realm of retail merchandise, RFID tags are tracking vehicles, airline passengers, Alzheimer's patients and pets. Soon, they may even track your preference for chunky or creamy peanut butter. Some critics say RFID technology is becoming too much a part of our lives -- that is, if we're even aware of all the parts of our lives that it affects.

RFID: An introduction Radio-frequency identification (RFID) is the use of a wireless non-contact system that uses radio-frequency electromagnetic fields to transfer data from a tag attached to an object, for the purposes of automatic identification and tracking. Some tags require no battery and are powered by the electromagnetic fields used to read them. Others use a local power source and emit radio waves (electromagnetic radiation at radio frequencies). The tag contains electronically stored information which can be read from up to several meters (yards) away. Unlike a bar code, the tag does not need to be within line of sight of the reader and may be embedded in the tracked object. A basic RFID system consists of three components: An antenna or coil A transceiver (with decoder) A transponder (RF tag) electronically programmed with unique information

The antenna emits radio signals to activate the tag and to read and write data to it. The reader emits radio waves in ranges of anywhere from one inch to 100 feet or more, depending upon its power output and the radio frequency used. When an RFID tag passes through the electromagnetic zone, it detects the reader's activation signal. The reader decodes the data encoded in the tag's integrated circuit (silicon chip) and the data is passed to the host computer for processing.

The purpose of an RFID system is to enable data to be transmitted by a portable device, called a tag, which is read by an RFID reader and processed according to the needs of a particular application. The data transmitted by the tag may provide identification or location information, or specifics about the product tagged, such as price, color, date of purchase, etc. RFID technology has been used by thousands of companies for a decade or more. . RFID quickly gained attention because of its ability to track moving objects. As the technology is refined, more pervasive - and invasive - uses for RFID tags are in the works. A typical RFID tag consists of a microchip attached to a radio antenna mounted on a substrate. The chip can store as much as 2 kilobytes of data. To retrieve the data stored on an RFID tag, you need a reader. A typical reader is a device that has one or more antennas that emit radio waves and receive signals back from the tag. The reader then passes the information in digital form to a computer system.

RFID: A Technological Innovation in Retail Industry Three retail giants across two continents are among the true drivers of RFID technology throughout the retail industry. Wal-Mart in the US, Metro in Germany and Tesco from the UK have already integrated RFID technology into their respective supply chains. Wal-Marts January 2005 mandate that their top 100 suppliers ship only goods with RFID chips at the pallet level has forced the entire industry to recognize the RFIDs time has come. On January 17, 2005 Linda Dillman, Wal- Marts Senior Vice President and CIO, reported that 57 suppliers were live with RFID tags, with more hoped to be on line by the end of the month. While speaking at the National Retail Federations trade show, representatives from Wal-Mart, Metro and Tesco all reported initial success with RFID, but stressed that the true benefits would still take time. Several factors are driving retailers to push for RFID implementation, but the significant advantage is the ability to remove inefficiencies from current supply chain management by using real time inventory information. Retailer Advantages Real Time Inventory Information: RFID provides retailers with real-time inventory information that can help to prevent stock outs, locate stock within a store to avoid shrinkage of inventories, and can help to enable retailers to use more yield effective pricing strategies. A recent study cited in the Harvard Business Review looked at survey data from 71,000 consumers in 29 countries to decipher what shoppers do when they face a stock out of a desired product. The results confirmed what many retailers feared. Across the entire retail industry stock outs on average, cost each retailer approximately 4% of sales. Consumers are not patient with stock outs; in fact fewer than half will purchase a replacement item, with almost a third going elsewhere to find the item. Across the retail industry stock out levels remain near 8%, and represent a key issue that retailers hope to reduce drastically with RFID. One manufacturer currently using RFID technology to help reduce stock out statistics is Proctor and Gamble. Paul J Grieger, the director of supply-chain innovation at P&G recently noted that if the company could reduce stock out levels from 8 to10% to more like 2 to 3% of sales, the return on investment in RFID would more than pay for itself. Lastly, the use of real time inventory information to track stock will enable retailers to provide a greater level of service and sales support. Sales associates will able to see when and where stock will be delivered to a particular store, thus avoiding the relentless request that customers check back to see if an item has been brought into the store. Decreased Labor Costs: RFID provides technology that practically eliminates the need for human checking of stock. Labor reductions will be realized in the following areas of retail operations; receiving, stocking, check out, cycle counting and physical counting. Accenture estimates that effective RFID solutions can help retailers reduce a wide array of costs: receiving by 50 to 65%, stocking by 22 to 30%, checkout by 22 to 30% cycle counting by 40 to 60% and physical counting by 90 to 100%. Prevention of Theft, Shrink and Inventory Write Offs: Shrink is a retailing term used to describe inaccurate inventory counts as a result of customer theft, employee theft, inaccurate inventory counts due to misplaced items, and stock reordered because items are on a display shelf in another area of the store. The 2000 Retail Survey Report estimates that shrink represents 1.69% of sales for retailers. RFID technology has the potential to alert staff when items are being removed illegally, or when they have been 4

misplaced within the store. This can assist in theft reduction and also provide real-time accurate inventory counts automatically. Inventory write-offs occur when goods are no longer fit for consumption, the goods are no longer in demand by consumers, or they have been damaged while in the retailers possession. RFID technology offers solutions to track sell-by-dates of each product on the shelf. The collection and utilization of this information will help retailers maintain a better inventory management system that can react to demand much more quickly than current systems. The Accenture team estimated that the implementation of RFID technology will seek to reduce retailer shrink from 1.69% of sales to an impressive 0.78% of sales. Furthermore, they maintained that the implementation of RFID would reduce the cost of inventory write offs by as much as 20%. Totally Integrated Opportunities: In addition to improving the Supply Chain, the advent of RFID technologies will offer retailers new and unlimited marketing opportunities. Tracking a customers purchases before they leave the store offers retailers information that can immediately be used for the cross selling other related products. In-store suggestive selling allows retailers to communicate with shoppers while they are shopping in an effort to encourage them to buy an additional and/or complimentary item. A report conducted by the Boston Consulting Group on the success of the Metro Groups Future Store in Rheinberg Germany showed that the majority of visitors were receptive to the Information Terminals offering cross-selling suggestions. The most valuable computerized cross-selling terminal was for wine pairing. 64% of the respondents ranked it as highly valuable. Although it is difficult to estimate a value for these marketing opportunities, it would undoubtedly assist retailers in retaining consumers and increasing incremental sales. Lastly, the implementation of RFID technology will offer retailers the ability to change their pricing moment by moment. Real time inventory can allow for automatic price changes to be made depending on the remaining inventories. Retailers will be able to maximize their yield on high-in-demand items. The concept is similar to the system of selling airline seats. Yielding maximum prices for items according to store supply and demand levels will increase incidental sales for all retailers.

Customer Advantages Currently, consumers are relatively oblivious to the RFID technology and capabilities. However, there are a number of consumer protection groups that are operating websites and blogs aimed at galvanizing support for legislation limiting RFID and what companies can do with the technology. In the short term, companies would be wise to cooperate with one another in developing a common voice and launch a public education campaign to allay public fears regarding privacy. Consumer Savings: Most notably, consumer savings will result due to decreased costs in the supply chain. Currently, companies approach supply and demand in the only way that they know how. They produce goods in the hope that customers will buy them. Of course, historical information and trends are utilized, but it is by no means an exact science. Conversely, RFID will allow companies to better match up supply and demand. Manufacturers will not produce vast quantities of product that will not sell and retailers will not overstock excessive amounts of product destined to sit on store shelves gathering dust. RFID will enable companies to more quickly identify goods that can need to be discarded or replenished. This in turn will give the customer access to a better and fresher product. In the long term, this will also lead to a decrease in pricing for the consumer. Improved security/authenticity of prescription drugs: RFID will be used to distinguish genuine products from counterfeit products. This is a key consumer benefit given that counterfeits could potentially contain decreased dosages and elements as opposed to the genuines. Currently, consumers have no fool-proof method of vetting their prescriptions which could lead to potential health issues associated with ingesting counterfeit drugs. Efficient Recalls will reduce Deaths and Injuries: Faster and more reliable product recalls along with improved food safety. RFID can be used to identify and recall outdated products, which will further enhance consumer safety.

Clearly, RFID tagging on the unit level will benefit not only manufacturers and retailers but also consumers. Widespread consumer awareness of RFID has not yet occurred and the good news is that consumers that are aware of the technology have a relatively positive outlook on its prospects. Unfortunately for retailers and manufacturers, consumer activist groups are currently providing the public at large with its main source of information regarding RFID. Most of this information focuses on the prospects of consumer privacy invasion issues. The bottom line is that businesses need to begin public relations campaigns of their own with regard to RFID. If consumer groups continue to be the only voice being heard by the public, the public is more likely to view the issue totally from that viewpoint. One common voice of communication is necessary to inform consumers that their privacy will be protected and that many consumer benefits will come as a result of new RFID technology.

Evolution of RFID in the marketplace RFID technology has been in existence since the 1950s, yet todays adoption of RFID in the retail environment is being stimulated by global retail giants; not by the inherent benefits of the technology. Retailer mandates pushed on manufacturers to adopt RFID chips are forcing compliance, yet until the manufacturing sector integrates RFID to make their supply chain more effective, the implementation of RFID may stall. Integrated RFID technology not only provides supply chain cost savings, but also provides retailers with integrated marketing opportunities, and the ability to speed up the service experience in stores. Although truly valuable, neither of these benefits can be realized until RFID tags appear at the unit level. As a result, we conclude that widespread adoption of RFID technology will require an evolution in the market place ultimately a shift from retailers pushing this technology to manufacturers demanding RFID. As the manufacturing sector adopts RFID and integrates its technology within their existing systems they will achieve economies of scale, which will reduce RFID tag costs and middleware costs. This evolution of the retail marketplace is best illustrated in the following diagram:

Today top tier retailers are forcing major manufacturers to adopt RFID. However, going forward there needs to be an evolution in the marketplace where manufacturers fully adopt this technology. This will start to push the second tier of retailers to also seek these cost savings. The process will continue throughout the retail supply chain until the full adoption of RFID becomes a reality.

Although the supply chain benefits of RFID are not the only driver for this technology, we believe it is the starting point. When retailers or manufacturers increased profits outweigh the variable and fixed costs associated with implementation of RFID, adoption will occur throughout the industry. Diffusion of Innovation Pallet Level To estimate the implementation timeline of RFID on a unit level, we firstly created a diffusion of innovation graph for the implementation of RFID at the pallet level:

The graph illustrates an inverse relationship between individual tag cots and goods shipped with RFID (at the pallet level). In todays environment middleware issues and tag costs are the major barriers stalling overall implementation. Undoubtedly, the 2006 Wal-Mart mandate is helping to reduce average tag costs, and if WalMart publicizes its cost savings from RFID adoption, this will help to encourage other retailers and manufacturers to follow suit. We foresee manufacturers becoming the driving force of RFID throughout 2006 to 2009 as they realize economies of scale, and supply chain savings. This timeframe illustrates a change in the driving forces of RFID. By the time tag costs hit the one-cent mark, middleware solutions will exist to support effective implementation of RFID. The existence of affordable middleware will stimulate further adoption for all manufactured goods. Diffusion of Innovation Unit Level Early adoption of RFID at the unit level tagging will depend on industry profit margins. The greater the profit margin on each item, the more likely that the company will be willing and able to pay for RFID integration. Therefore, our diffusion of innovation graph for RFID at the unit level is segmented by the industry. We believe there will be different groups of early and late adopters of this technology: 8

At present, tag costs are prohibitive for many industries, but with the economies of scale associated with mass production of the tags (which could happen in the next four years) costs will drop. As the graph depicts, tag costs will likely reach the 5-cent mark around 2008. We have identified 3 to 5 cents as a threshold for many industries to begin to implement RFID on a unit level. Tag costs should reach 3 cents during 2009, and at this point, many manufacturing firms should be implementing pilot programs to test the effectiveness and supply chain efficiency brought about by unit level RFID technology. In addition, most of these firms will have already implemented RFID on a pallet and case level, thus they will have gained experience with the technology, and will be ready for an efficient deployment at the unit-level. A majority of the fixed costs, which involve readers, middleware and systems integration, will already be secured at this point in the implementation process. We have identified three tiers of the manufacturing industry--mostly separated by profit margin levels; the first tier will be the first to adopt RFID, the second tier will be second, and so forth. Tier one consists of the pharmaceutical industry (both over- the-counter and prescription) as well as high-end electronics manufacturers (plasma and LCD flat-panel TVs). Examples of tier one firms would be Pfizer, Bayer and Sony. The average profit margin in the pharmaceutical industry is over 15%, while the profit margin on big-screen televisions is approximately 20-30%. Tier two consists of soda, and other bottled, canned or packaged beverages. In addition, tier two is composed of high margin consumer packaged goods such as cosmetics, razors and cigarettes. Examples of firms in these industries would be Coca-Cola, Pepsi, Procter & Gamble and Phillip Morris. The average profit margin on cosmetics is 10%, beverages--almost 8%, and tobacco products garner about an11% profit. Finally, tier three is difficult to define, and consists of the late-movers from an array of other industries--most notably packaged foods such as cereal and snack foods. Many tier three producers may very well decide not to implement RFID altogether, if they can afford not to avoid the technology and its associated costs. Examples of firms in tier three are General Mills, Jays Potato Chips and Hersheys. We have determined that it would be difficult for producers to justify placing an RFID tag on every single box of cereal or bag of potato chips, due to shrinking margins and low degree of theft. 9

Key Drivers Price: There are several key drivers that will play crucial roles in the early or late adoption of RFID on the unit level. The most important of the group is tag costs. Based on the research and manufacturer/retail attitudes and increasing concern with margins, cost is and will continue to be the main issue. Currently, RFID tags are far above five cents. Based on our research and analysis, when the tag price falls below five cents, a number of early adapters will adopt. Another surge will occur when the tags fall below three cents and yet another when the price drops to one cent or less. Middleware: Middleware issues are another important driver in RFID implementation. Currently, the number of middleware providers is limited and their experience with the technology is also limited. In other words the learning curve is steep and there has not been significant experience to draw from with regard to middleware. As suppliers gain more knowledge and have increased numbers of customers, costs will decline. With just a few customers and clients that are only interested in doing the absolute minimum to be compliant, costs on middleware will remain high. Early Successes or Failures: Perhaps the most important driver in the adoption timeline of RFID is the density of early successes or failures. Right now, all eyes are on Wal-Mart as the retail and manufacturing world wait to see whether or not the whole pallet level implementation scheme is a success or a failure. We will not see huge efforts to implement until companies have some sort of case study from Wal- Mart to examine. If Wal-Mart has any more stalls in its efforts to have suppliers conform, we will likely see stalls in overall RFID adoption. Because Wal-Mart if the 500 pound gorilla, and because they are the first ones to explore this uncharted territory, all eyes are on them. If Wal-Mart proves to be successful in its endeavors, more companies will follow and RFID implementation on the unit level will happen more quickly. Consumer Acceptance or Lack Thereof: Consumer acceptance levels should not be underestimated. There is currently a small groundswell of consumer activist groups lobbying for legislation restricting RFID capabilities. Currently, consumers know little if anything about RFID. They are beginning to hear the initials and vague descriptions of what it entails. Companies need to start public education campaigns aimed at alleviating consumer fears. If consumers receive their only information regarding RFID from antiRFID consumer groups, they will launch a full, scale campaign to ban RFID altogether. However, if companies as a whole are honest and forthcoming about their intentions and the consumer benefits associated with RFID, implementation will occur much more quickly and with higher levels of consumer anticipation and perhaps even excitement.

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CASE STUDIES Prada and its epicenter project(s): Whereas many people are familiar with Wal-Mart, most have never heard of Prada. This Italian fashion company was founded in 1913 by Mario Prada as a quality leather goods business and subsequently became part his granddaughters, Miuccia Prada, inheritance. She expanded the business starting in 1985 with a high-priced black nylon bag (which became so popular it spawned a global industry of Prada counterfeit goods), and in 1989 she designed her first clothing collection and continued Pradas rise to the pinnacle of the fashion industry (Wikipedia, 2006). To compare Prada to Wal-Mart is to compare the proverbial apples and oranges. WalMart wields its purchasing power for just one purpose--to bring the lowest possible prices to its customers, whereas. Prada takes a decidedly consciously intellectual approach to fashion and the whole retail experience, which has been the basis for its groundbreaking experiment to create a new retail experience for Prada customers. Even if Pradas unusual experiment in retailing has perhaps created more buzz than profit, their use of RFID technology portends wider retail use, and industry watchers believe that RFID will have a major impact on retail. Prada just seems to be ahead of its time - pushing the envelope with its ultra-bold architecture and rather avant-garde approach to making clothing purchases: The projects span from research on shopping and new concepts for Prada as a brand to the creation of a series of stores in strategic locations throughout the world. Beyond restructuring the physical reality of Prada, its virtual presence is simultaneously expanded through extensive in-store technology projects and the creation of a website. The combination of these aspects allows for the building of an integrated service structure that enables Prada to provide a new sense of exclusivity, while also reinforcing the aura of the brand. The new Prada Epicenters offer a diversification of the shopping experience: the commercial functions are overlaid with a series of experiential and spatial typologies that enrich and expand the territory of shopping. The Epicenter stores are a working experiment and provide a laboratory for new spatial relationships, materials, technology applications and service strategies.(Prada Epicenter Projects, 2004) Is it smart retailing? Never before has there been such a technologically ethereal, new-age approach to shopping as the experience at Prada. RFID is used everywhere: a scanner automatically reads data on the tagged clothing, shoes and accessories, to provide instant information about sizes and colors and to also upsell: suggest additional items to coordinate with what the shopper is trying on. Sales associates use handheld scanners to track inventory and customer data such as size, purchase history, and style preferences. When a customer is ready to try on a garment, she enters a high-tech dressing room, hanging the garment in a smart closet. The dressing room itself is a clear glass room that turns opaque when the sales associate steps on a black button on the floor. The dressing room contains two Lucite boxes: one for shoes and purses and a long, narrow one for hanging garments. There is a thick, flat bronze ribbon embedded in the room: the RFID antennas (Robert, 2002). Every dress, handbag, and pair of shoes is tagged with Texas Instruments RFID Tag-it Smart Labels. Handheld readers are located all around the store for use by sales associates to readily find prices and other information. Video monitors show a design from conception to runway to store and provide in-depth information about color, cut, fabric and materials. Although customer experience is a clich, Prada has tried - through technology and expensive architecture - to provide an unparalleled level of service and experience. Another concept Prada employs is the convenience card, which may be used to shop anonymously or have the sales associate scan the RFID chip in it, which will identify the 11

customers preferences. Prada wants to give its customers a superior level of service, and given the prices it charges, it can afford to provide it. The Epicenter Stores are, no doubt, a clever marketing strategy, with over $40 million spent on the New York store alone. A substantial portion of this amount has gone into the deployment of RFID. The Wave, a half pipe-type structure, in the middle of the ground floor with its ramp does double duty as a shoe display during the day and a stage at night (Sokol, 2003). The unpredictability of the architecture is designed to keep the customer curious and exploratory; although Prada ultimately discovered that it also attracted gaggles of non-buying tourists. Undaunted by this and other problems, Prada has opened an Epicenter in Beverly Hills (Prada Epicenter Projects, 2003). In deploying RFID technology, ROI (return on investment) was never a concern all the decisions were about the seamless shopping experience of the customers. Prada claims they are firmly committed to future additional applications of RFID and their integration into the companys IT systems. These Prada stores are more about sizzle than the bottom line, and their sales and revenue statistics bear this out. The company lost $77.5 million in 2004 (Kaiser, 2005). Not everything has performed well or as expected in the Prada operations. Susan Reda, a writer by profession, visited Pradas New York Epicenter store and reported that most of the upscale retailers much ballyhooed technology is either not working or nowhere to be found. (Reda, 2004). Despite the store being hailed as a harbinger of retail design to come, it is suffering from the experience of having rushed to install technology before it was tested and before its employees were trained to use it and the customers were ready to accept it. Also, it was reported that some of the technology used in the store wore out early, for example, a number of readers were no longer able to read the individual tags. The color-changing dressing rooms were also discontinued in the next generation Epicenter store, the Beverly Hills store, basically due to problems with the technology not working and leaving undressed shoppers publicly exposed (Reda, 2004). Prada should be acknowledged as a forerunner in applying RFID to retailing. Before the Prada New York Epicenter, RFID technology was virtually unexplored by retailers, and now that the potential impact of it on retail is being realized, it is expected to revolutionize the way people shop. What Prada tried as a retail experience probably wont be tried again anytime soon. For one, the tags they used cost close to one dollar each, but again, their aim was not to cut costs or thwart theft but to improve service (Prada Epicenter Projects, 2004). Prada did make many changes in the subsequent Epicenter stores they opened in Los Angeles and Tokyo, learning from the New York store pitfalls.

PRADA EPICENTER STORE

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What RFID has done For Wal-Mart and vice versa: Expansion in the field of RFID has been on the Wal-Mart agenda for some time and their message has been consistent. Believing RFID technology could work with pallets and cases of goods, the big retailer has installed 14,000 pieces of hardware, run 230 miles of cable and is live with more than one hundred suppliers (Sullivan, 2005). Before issuing the mandate to their suppliers for compliance, Wal-Mart ran a pilot test February through September, 2005 in 24 stores. Twelve stores were outfitted with RFID readers/antennae at various locations, including receiving doors, sales floor doors and box crushers. The other twelve stores were control stores. For the study, they tracked 4,554 unique items representing merchandise from nearly every department and evaluated these products to determine which ones were likely candidates for tagging. The overall results of the test showed a 16% reduction in stock-outs and a 2/3 drop in replenishment times (Johnson, 2006). These results were accomplished by combining pointof-sale data with RFID information on stock in the back room, providing a pick list in real-time based on sales, saving time and labor. This application eliminated scanning the shelves to see what needed to be replenished and scanning cartons and cases arriving in the stock room. Wal-Mart is now moving rapidly to install RFID technology in all their stores Wal-Marts test shows how RFID can provide retailers with real-time inventory information. Prada considered extending the real-time inventory capabilities of their hand-held scanners by linking the retail floor with the stockroom but for never implemented it, partly because of the temperamental nature of the scanners. Wal-Mart is expanding RFID technology into other operations. It is already working on tracking recalls and putting RFID onto warehouse forklifts, to name two additional projects (Sullivan, 2005).

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Smart-shelf systems - too smart for our good? Wal-Mart claimed it backed away from one of its projects, a planned trial with Gillette, because of priorities and not because of consumer backlash. The proposed smart shelf system was supposed to pick up data from chips embedded in individual Gillette products and alert store managers when shelves needed replenishing or when products might have been stolen two important measures to retailers (Shim, 2003). With the exception of Pradas experiment, the Gillette project was seen by consumer privacy advocates as an aggressive move of RFID technology into consumer privacy. Whereas RFID is a great tool for inventory control and theft prevention, it has the unfortunate side affect of potentially snooping/spying on individuals. In other words, RFID tags can potentially track you: where you shop, what you buy, how often, how many. Privacy advocates are concerned that the personal information these tags gather could be broadcast to the wrong persons for wrong reasons and with potentially severe consequences. This argument against RFID was also leveled at other similar technologies such as credit cards, or store card where a customer could get some savings through a reward program by allowing his or her buying habits to be captured for marketing purposes. RFID tags take this concept to the next level, knowing what you are wearing and which brands you buy, and just about every purchase could be numbered, tracked and categorized. Should private companies have that much information about a consumer? If there is no public resistance, there will be nothing to stop retailers, the government or even criminals from tracking and monitoring anything.

WALMART SMART SHELF SYSTEM

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CONCLUSION The progression of RFID tags from a label-carrier system to being truly embedded in the packaging structure will provide the packaging industry with a real solution to producing packaged products that satisfy the high speed manufacturing demands of consumer packaged goods manufacturers. It is in the next five to seven years that these new chemistries and embedding systems will further accelerate unit level adoption. Effective RFID solutions depend on totally integrated systems than can assimilate data to create decision ready information, in addition to necessary sharing of information with retailers. As with any new idea, there must be an overriding consumer benefit that finally solidifies the adoption of any sustainable technology. The ability to tie the consumer into the information chain is inherent in the macro software system. The ability of the consumer to have in-home monitoring of stock and stock-outs in their own refrigerator/freezer/pantry is totally realistic. The ability of the home system to talk to the retail store for reordering is already being studied by some major retailers. The added ability of the RFID chip to talk to a microwave oven to automatically set defrosting and cooking times is also being developed as of this writing. As consumers continue to become time deprived and their eating and cooking habits evolve to address this issue, inhome use of RFID enabled consumables and appliances will become as commonplace as the home computer. Another significant change will be in the area of advertising and promotion of consumer products. The ability for the retailer to monitor the shopping habits of the consumer in the store at the time of purchase is going to affect present models of communicating with the consumer. The power and effectiveness of presenting messaging to the consumer will now fall to the retailer which will give them more economical muscle with the consumer packaged goods manufacturer.

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References: Stephen B. Miles & Sanjay E. Sarma RFID Technology and Applications (Cambridge) Klaus Finkenzeller RFID Handbook (Wiley) V. Daniel Hunt, Albert Puglia & Mike Puglia RFID: A Guide to Radio Frequency Identification (Wiley) Web References: http://en.wikipedia.org/wiki/Radio-frequency_identification http://electronics.howstuffworks.com/gadgets/high-tech-gadgets/rfid.htm http://www.aimglobal.org/technologies/RFID/what_is_rfid.asp http://www.rfid4u.com/courses/RFIDinRetail.asp http://www.indiaretailnews.com/retail-insight/rfid/43600-rfid-tagging-is-the-time-ripe-for-retailearly-adopters

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