Magazine Article | May 1, 2005

RFID's Impact

Source: Innovative Retail Technologies

Am I deaf from the hype, or is no one really saying anything?

Integrated Solutions For Retailers, May 2005
Matt Pillar

The energy generated at RFID World 2005 is bound to bubble over into this month's Retail Systems show, given the spotlight shared by CPG (consumer packaged goods) vendors, retailers, and the RFID solution vendors who serve them. But despite RFID World's wild success, don't expect RFID to steal the Retail Systems show altogether. There isn't enough retail momentum behind the technology to back up the hype.

Adoption of RFID is taking place at the product manufacturing level, so that's where today's big RFID story is. CPG companies are working hard to meet retail mandates, and some are even discovering internal (closed loop) business cases for RFID. But the CPG success stories on open loop solutions - those they're deploying to meet retail supply chain mandates - are still scarce. The same case will play out for small and midsize retailers who don't have Wal-Mart's muscle and RFID business case. Closed-loop applications of RFID - those that take place in environments like Abercrombie & Fitch or Gap where the retailer controls the entire manufacturing and retail process - will produce the best ROI statements for retailers. But who's talking?

RFID's ROI - A Competitive Advantage?
With the exception of Wal-Mart, retailers won't even try to verbalize their cases for RFID for some time to come. In open-loop scenarios, where a retailer is attempting to push a mandate on its suppliers, the silence may be a result of failure. In all but the uppermost echelon of retail, I would suspect this to be the case. In closed-loop scenarios, I hope the silence is due to fear of blowing a competitive advantage by sharing the how-to of resounding RFID success. Many an RFID vendor has instilled this hope by sharing these success stories with me, and even naming names (in confidence, of course). So there are retailers moving forward with the technology. But they're not many, and they're not talking.

At RFID World 2005, Target, Best Buy, and JCPenney representatives lay low as they cruised the floor. They were among the mere handful of retailers in attendance (though, to the show's credit, manufacturing sector turnout was outstanding). I asked them a few questions. In the interest of brevity, I'll paraphrase here:

ISR: What are you shopping for at the show?

JCPenney: This resort is great. Have you seen that huge TV at Texas Station?

ISR: Has anything at the show caught your fancy?

Target: Boy, TI-RFid's Bill Allen and the rest of the RFID World Jam Band sounded great last night. Did you catch the show?

ISR: Do you have an ROI plan for your RFID investment?

Best Buy: How 'bout them Cowboys?

In other words, talk was about anything but the specifics on their respective plans for RFID. I didn't walk away with a realization I had hoped to gain - that RFID isn't just a cost without benefits.

I hope it's different at Retail Systems. I hope the forum there, dominated by retailers, enables a more open dialogue on the promise - and peril - of RFID in retail. How do you think a retailer can gain an RFID advantage? E-mail me at, and tell me what you think.