Perhaps not quite yet, but we’re definitely on the way. Tags are getting better, smaller and more durable, and as a bonus, their prices are going down. So, what is still standing in the way of item-level RFID in the grocery industry?
Razor thin margins, that's what. The grocery industry simply
cannot afford to add any costs to their grocery items. At least,
they cannot do it without lowering other costs, such as shrinkage
and labor costs. An investment in item-level RFID would have to
present a damn good and fast ROI (return on investment) in order to
be appealing to the grocery industry. The question that puzzles us
isn't "will we get there?", but; "are we there yet?"
In this article we'll discuss the following subjects:
- What is item-level RFID?
- RFID in the grocery industry today
- Item-level RFID versus self-scanning barcode
- Tags and their development
- Tagging at production or at the
- Privacy issues - To kill or not to kill
- 7 reasons why item-level RFID will knock out
In the next article on this subject we will discuss more
practical details, such as; for what does the production, supply
chain and store personnel use item-level RFID? How are challenging
product groups tagged for best reading performance? We will go
through the 6 most typical item-level RFID applications used in the
grocery sector and dig deeper into the concrete benefits of each
WHAT'S THE FUZZ ALL ABOUT?
It's not about getting the latest tech gadgets, although that is
tempting too. It's about not just knowing that you bought 5000
packs of meat, but also exactly where in the premises each one is
at any given moment. How many are in the backroom? How many are on
the shelf? How many are in customers' shopping carts? How many are
misplaced on the wrong shelves?
This can be done by tagging all grocery items separately creating
a personal ID for every single item. By doing so, grocery retailers
will gain cost savings from applications like; automatic
replenishment alerts to the staff, fast and accurate inventory,
flawless supply chain management, improved customer service and
less shrinkage. Grocery retailers need to save money and increase
their sales constantly in order to be competitive. All this cannot
be done with mere barcodes.
RFID IS ALREADY BIG IN GROCERY - BUT NOT ON
RFID has been present in the grocery sector for a while now, but
only on cartons and RTIs (returnable transport items, such as
pallets and trolleys), with a few exceptions;
Future Store, in Moscow, Russia, is a project run by Rusnano,
X5 Retail Group and OJSC RTI, where a store has been piloting
item-level RFID on grocery items. The project has been very
successful and they hope to do a full roll-out in a store within
the end of the year 2013.
Today in the grocery industry RFID is first and foremost used for
improving supply chain processes and for ensuring the "FIFO" (first
in-first out) principle. The RTI industry uses RFID in their asset
management for gaining transparency and seeing to that valuable
transport items are taken care of and returned to base after
Implementing RFID in the grocery supply chain changes many work
processes. We are talking about a system where grocery items are
scanned and tracked through the distribution channel, perhaps even
during production, all the way to the store backroom. In some cases
the tracking continues even on the shop floor, for instance when
the grocery items are stored in their transport items (e.g. fruit).
Jon Mellor at GS1 says "If you have fresh produce and you're
driving your forklift into the warehouse, you want to make sure
you're sending out the oldest produce first. An inventory that
might take you two hours to do with barcode can literally be done
in two minutes with one person." This is possible to do with
carton/RTI-level RFID as long as the grocery items are stored on
the shop floor in the same tagged transport items that they came
Read more about carton and RTI tagging in our earlier articles: Not to perish so
Managing RTIs - Returnable Transport Items - with RFID and
The need for intelligent reusable transport items.
Grocery retailers that already have RFID on carton/RTI-level are
in a good place to expand the system to item-level RFID. A big part
of the hardware and software system is already paid for. The ROI
for implementing item-level RFID when you already have an RFID
system is significantly better than when you start from scratch. On
the other hand, if a grocery retailer is planning to adopt RFID on
carton/RTI level, the extra cost for adding future-proof solutions
for item-level tagging is far smaller than redoing the system when
that time comes.
ITEM-LEVEL RFID VERSUS SELF-SCANNING BARCODE
If not RFID, what would be the next thing in grocery
retail? Some say self-scanning barcode systems and claim it could
cumulate item-level RFID completely. The self-scanning system
involves handing out mobile devices to customers as they enter a
store. The customers can then use the mobile devices to scan
barcodes and get additional information about the products and
discount offers, as well as gain access to an electronic shopping
cart application. Customers scan items as they pick them. The
mobile computer gathers a list of the items that is directly used
for charging at check-out - thereby, automating the check-out
On the other hand, we have another growing trend as well; NFC
(near field communication). NFC allows smartphones to establish
radio communication a few centimeters from an NFC RFID tag. NFC
also offers many other perks than just reading product RFID tags,
which is one of the reason why we think THIS will be the way to
gain additional product information in the future. As smart phones
get more and more common, customers will bring their own "reading
devices" to the store. Customers can also borrow a mobile RFID
reader at the store or use a so called "smart shopping cart" that
we will discuss further in the next article about this
The benefits for grocery retailers of a self-scanning barcode
system, is merely improved customer service and faster check-out.
In order to achieve the benefits that item-level RFID would add to
this, such as automated work processes and transparency, retailers
would have to adopt other measures. There is really no point in
investing in several systems when one flexible system can do it
The best possible scenario, although it takes a slightly higher
investment cost, would probably be a system that allows reading of
both barcodes and UHF RFID tags. By using a mix of barcode and
RFID, item-level adoption can start before all grocery product
groups are being tagged. Most grocery retailers would probably
escalate by first tagging high-value items or items that are prone
to be shoplifted. The mere saving in shrinkage could be enough to
cover the item-level RFID costs. Gradually more and more product
groups would be RFID tagged as the tag prices go down. The benefits
of an RFID check-out can be received only when all items have RFID
tags, but this too could start as a classic self-service check-out
where customers can scan barcodes/tags themselves. Flexible and
future-proof solutions are a must for avoiding high technology
investment costs in the long run.
THE ERA OF SUPER TAGS IS SEING DAYLIGHT
It used to be about "the tags are too big for small grocery
items" or "the tags are too expensive for low-value items". Other
worries concerned the tag's inability to handle water,
condensation, cold, ice, et cetera, et cetera…
Although small tags and water-proof tags existed on the
market back then as well, they seldom combined the two features by
being both water-proof and small. But, thankfully, it seems this
phase is over and super small water-proof tags can now be found on
the market. Besides from being easy to hide, they are also suitable
for products on display in freezers and refrigerators where
condensation and ice have been a huge problem before.
Tags are improving, but tag prices are dropping. The reason for
this is research and mass production. The more RFID adoptions, the
more affordable it will be to manufacture tags. Since the trend is
going towards more and more RFID adoptions, we can rely on the fact
that tag prices will keep dropping. Tags that can be incorporated
in and printed directly on the product package are already on the
market and expectations are high that they will be a big cost
dropper in the future.
The price of the tag depends, of course, much on what kind of tag
we are talking about. Most see passive standard EPC Gen 2 tags as
the most probable option, since they are more affordable and create
less RF interference than active tags. But it is also likely that
different tags will be used for different item groups, especially
if the trend goes towards tagging at production.
What is a suitable tag price level for adopting item-level RFID
in grocery? That is a good and difficult question, since no case is
like the other. It depends… What kinds of tags are needed? What
kind of applications will they be used for? What are the costs of
tagging the items? What savings can be achieved? How much is the
estimated additional sales of the tagged product? The best way to
find out is to do a ROI calculation for each case.
WHO SHOULD THE TAGGER BE?
One important question that has yet not been answered is;
who should tag the products and pay for the tags? Is it the grocery
producer, a distribution center or the grocery retailer? The same
discussion has been taking place in apparel retail where item-level
tagging is becoming mainstream.
The likelihood is that all methods will be used, at least at
first. But as RFID gets more and more widespread, the trend will
probably move towards tagging at production, as it has with
barcodes. And to be honest, either way it's usually the consumer
who pays for additional costs. But let's not forget, the main task
of item-level RFID is to improve processes and lower costs. So,
eventually we are looking at a scenario where the consumer prices
actually drop as production, distribution and storage costs
One of the biggest concerns among consumers is, of course,
privacy. Especially since the tags are getting smaller and easier
to hide. "Will they be spying on me?" We actually made a video
about this subject that you can check out
There are many approaches to solve this issue, but we'll only
look deeper into one in this article: killing or disabling of tags
TO KILL OR NOT TO KILL - THAT IS THE
The easiest way to ease the privacy concern is to apply
"kill-tag" or "disable-tag" functions at check-out. There are
several ways of preventing a tag from revealing its
- "Total kill-tag" - the
tag is destroyed and can no longer be used. This is a 100%
fool-proof solution that eliminates all possibilities to awake the
tag and scan the content.
- "Semi kill-tag" - the
tags reading range is dropped to a few centimeters making it
impossible to scan the tag from a long distance. The information is
still on the tag, but hard to get to without the consumer noticing.
This doesn't completely eliminate the privacy issue, but it is
convenient when products are returned to a store or when the
consumer is interested in more information about the product after
it has been purchased.
- Tag information removal
- All information related to the product is erased from the tag.
The tag is still active - there is just nothing of interest
on it. Sounds great, but there is a catch here. Tags have a so
called TID Bank that contains information about the tag model, the
tag manufacturer and possibly a tag serial number. This information
cannot be altered or erased, which makes it possible for grocery
retailers to associate the tag serial number to a product SKU in
the backend-system. Again, this is convenient when a product is
returned or more information about the product is wanted after
purchase, but it also means the particular grocery retailer that
the product was purchased from, could scan the tag and know what
product it is. This, regardless that the product information has
- Encryption of tag - The
tag is still active, but the information is behind encryption
codes. This system could be effective to some extent, but as with
number 2 and 3, there are ways to circumvent them.
The easiest way to make sure privacy is no longer an issue is to
kill the tag completely. That is the only way to make sure the tag
can't be used to invade privacy.
Killing the tag, as well as decreasing the tag's signal range,
eliminates the futuristic problem of having too many active tags
moving around in the store creating reading interference of the
tags that really should be read. When RFID becomes mainstream, this
might be a problem that demands solving.
Killing tags is handy, but there is another downside - the loss of
the possibility to use RFID in product life cycle management. By
allowing the tags to stay alive, post-store applications will be
made possible. In a previous article,
RFID a world of opportunity, we mentioned smart refrigerators
that scan the tags on the grocery items inside. It then informs the
owner of expiring dates or products that are running low. Another
important post-store application is end-of-life management. We have
written an article about this subject too, A push
towards recycling with RFID. By keeping the RFID tags alive on
CPGs (consumer packed goods), future RFID waste management systems
could assure that the waste is properly disposed of.
No matter what way grocery retailers choose to go with this in the
future, customer control over the system is crucial. It doesn't
matter how secure the system is if it feels like voodoo to the
customers. Make it transparent, and, why not let the customer
choose what happens to the tags at check-out, e.g. with the simple
push of a selection button?
7 REASONS WHY ITEM-LEVEL TAGGING WILL
EVENTUALLY WIN IN THE SUPPLY CHAIN
Supply Chain Digest published an article where they stated 7
reasons why item-level RFID will be the technology solution of the
future. They are concentrating on the supply chain but I think the
same benefits can be achieved on the shop floor and in the backroom
- Automated systems will always win against manual
- The trend is moving towards wanting to track everything
on an individual, serialized level.
- Companies will need to streamline their processes and
manual barcode tasks will be seen as "non-value added
- First adopters will gain competitive advantages, causing
others to follow their path.
- Increased regulatory requirements, especially concerning
food and medicaments, will mandate the use of RFID.
- In the future, growing supply chain complexity will
demand more efficient solutions than barcode systems can
- As RFID finds its way into smartphones and payment
systems, RFID customer service will become obvious.
Many grocery supply chains already have a working RFID
system (on cartons and RTIs) that can be utilized for parts of a
new item-level RFID system. The key is to make your system
future-proof. And how do you do that? One way is to look into
medical industry and how pharmacies and
blood banks are solving item-level tagging. They too
struggle with liquids, cold products and metal shelves, but still,
they are moving fast forward with item-level RFID.
Back to the question, are we there yet? In 2011
James Tour, professor at Rice University said: "I think it's
going to be five years before it's good and it's ubiquitous," He
adds that it's very hard to make a prediction that hedges his bet:
"I'd say five years. If I'm wrong, it's going to be three. Or it's
going to be seven."
The truth is, nobody knows. But, one indicator that several
grocery retailers mention is; when a tag's cost is under 1 cent,
that's when. Personally, I think it demands one big grocery
industry leader to take the first step and show the way. The rest
Not to perish so
Managing RTIs - Returnable Transport Items - with RFID
The need for intelligent reusable transport items
RFID a world of opportunity the ingenious use of RFID
push towards recycling with RFID
counterfeit drugs with rfid
Stowers institute unveils item-level tagging for medical
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