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The Secret Life of RFID

Retailers that don't reveal information about their deployments are slowing adoption and reducing their own ability to benefit from the technology.
By Mark Roberti
Dec 01, 2012—When I was a young reporter based in Hong Kong, I met a curmudgeonly British journalist who had covered World War II and the Vietnam War for The Times of London. He'd made Hong Kong his home, and he lived mostly on his reputation. Chatting over a beer, he would tell me: "The best stories never get reported."

What he meant, of course, is that the real dirt never gets revealed, because the people involved are too powerful. Still, I'm reminded of his comment every time I hear about a successful radio frequency identification deployment that a retailer prefers to keep secret, because the company feels there is nothing to be gained by letting its competitors know about the benefits the technology is providing.

Photo: iStockphoto
Only a few retailers, including American Apparel, Macy's and Walmart in the United States, and Charles Vögele and Gerry Weber in Europe, have publicly discussed their RFID deployments. Yet, "19 of the top 30 retailers are actively investigating, piloting or using RFID today, that I am aware of," says Bill Hardgrave, dean of Auburn University's College of Business and founder of the University of Arkansas' RFID Research Center. These include both department and specialty stores, says Hardgrave, who has worked with many leading U.S. retailers.

It's certainly understandable that companies don't want to let their rivals in on a good thing. Retail is intensely competitive, much more so than, say, health care. Every little edge might help. But keeping RFID deployments secret is unnecessary and potentially self-defeating.

That's because the basic RFID applications—inventory management, replenishment, product locating and shrinkage reduction—enable retailers to execute better on their existing strategies. They may give retailers a slight edge. If you don't have the right products on your shelves when customers want to buy them, they'll go shop somewhere else. But they do not change a retailer's existing strategy in a way that would provide a significant competitive advantage.

Retailers compete on image, style, quality, price and getting the customer into the store. If they have the right image, style, quality and price—and, presumably, they feel they do—RFID will help them take better advantage of that mix. That, in turn, will help draw customers in—and ensure they walk out with the items they came for.
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