What Metro Knows About RFID

By Mark Roberti

The German retailer invested millions in a massive display at CeBIT. The big question is, Why?


As I write this, I’m flying over Paris on my way back from Hanover, Germany. I was invited by GS1 Germany and BITKOM, a German IT association, to speak at the RFID Forum they organized at CeBIT, the massive German electronics fair. It was the first time radio frequency identification technology had been exhibited at CeBIT, and the Metro Group ensured that RFID made a big splash.

On Friday evening, after my presentation, I wandered over to the NCR booth. John Greaves, NCR‘s vice president of RFID solutions, and I were marveling at the size and quality of Metro’s exhibition. “You’re going to have to muster all your literary skills to try to convey this to your readers,” John said. “Not possible,” I replied.

It would be an exaggeration to say that the area taken up by Metro should have had its own customs and immigration department. But at 2,800 square meters (more than 30,000 square feet), the exhibit would take up an entire hall in some convention centers. It had areas that were designed to look like a store of the future. These showed off smart shopping carts, smart scales, RFID self-checkout stations, smart clothing racks and more.

There were areas designed to look like rooms in the home of the future, with a smart washing machine, a smart fridge and a smart microwave. There were also displays with explanations of how RFID is being used in transportation, sports and other applications. Since I can’t adequately convey just how elaborate it was, take a look at some of the photos I shot, which are on display here.

Metro is not an electronics company. It’s not a technology company. It’s a retailer—the largest in Germany and fifth largest in the world. So why would a retailer spend a small fortune on a huge exhibit at CeBIT? I went over to Dr. Gerd Wolfram, managing director of MGI Metro Group Information Technology GmbH and executive project manager of the Metro Group’s Future Store initiative, and said: “Gerd, what’s the ROI on all this?”

He grinned. “Well, if you look in the German papers, you’ll see the return on investment,” he said. “We’ve received tremendous coverage in the press and on television. The Chancellor of Germany [Angela Merkel] mentioned RFID when she opened the fair. We’re pushing RFID into the mainstream.”

Metro knows, as other leading early adopters do, that RFID isn’t going to deliver benefits unless everyone uses it, so pushing it into the mainstream will have long-term benefits for Metro. But there’s something else going on here. Metro is using RFID (and other technologies) to send a message to customers, potential customers and perhaps investors and potential investors: “We’re a tech-savvy retailer, and we’re using technology to better serve our customers.”

I was at SAP‘s Sapphire conference in Orlando in 2002 when Metro showed a video detailing its plans to build a “Future Store.” The video talked about using RFID and other technologies to create a store that would provide customers with better information and serve them more efficiently. For instance, there would be a reader in the shopping cart that would communicate the value of goods being purchased wirelessly to the cash register when a shopper went to the checkout line. This would speed up the checkout process by eliminating bar-code scanning. It all seemed many years, if not decades, away.

But Metro built the Future Store. The retailer took an older store in Rheinberg, Germany, and equipped it with some of the most advanced technology in retailing. The retailer also uses RFID in the store’s supply chain. But I’m sure all this wasn’t done just because Metro likes cool technology. It had clearly surveyed its customers and realized there was an opportunity to position Metro as a new kind of retailer.

“Customers want to have a pleasurable experience when they shop,” Wolfram said during the RFID Forum. “They want technology and service. We are responding to those demands. We want to make our markets more attractive and make the shopping experience more fun.”

So, is the strategy working? Apparently, it is. The Future Store has seen a 20 percent increase in customers. “This proves our theory that customers are interested in the technology,” Wolfram said.

Right now, it seems Metro is working on its image as a tech-savvy retailer that wants to better service its customers. It’s not deploying RFID throughout its stores because the technology isn’t ready. But when it is, Metro will be able to move faster than its competitors to improve the customer’s shopping experience, because it has been studying whether consumers like or don’t like certain applications of the technology—and it’s been studying how they use and interact with technology in stores. So Metro will know what to roll out and what not to roll out when the time is ripe. It’s a smart strategy that positions Metro for growth, even as the number of retailers in the European market increases.

So how come no retailer in the United States, which always prides itself on being at the forefront of technological innovation, has adopted this strategy? I don’t know, but I have several theories. First, for all our technological sophistication, we Americans aren’t always eager to adopt new customer service technologies. ATMs, self-service kiosks, smart cards and other technologies caught on far faster in Asia, for instance, than in the United States.

Another issue is, of course, privacy. No retailer in the United States even wants to mention smart shopping carts for fear of incurring the wrath of privacy advocates. Retail technology is seen as more of a threat than a blessing thanks to…well, no need to mention names.

That’s unfortunate. As a consumer, I’d like to be able to take a bottle of wine over to a kiosk and get more information about what dishes it goes with. I’d love to have a refrigerator that sends a shopping list to my local supermarket, which delivers what I need, when I need it, for a service fee. I’d love to be able to wave a box in front of the microwave and have my frozen pizza cook automatically.

Luckily, I have a few years before Metro makes some of these applications a reality, and I can use that time to convince my wife that we should move to Germany.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.