2007 Could Be The Year RFID Gets Smarter

Soon, RFID could track items as customers pick them up from store shelves throughout America and immediately trigger displays with very specific information and advice -- like which top will match those pants you're holding and where exactly you can find that top.

Radio-frequency identification, or RFID, is poised to help retailers and service providers tap into the seemingly infinite potential for enhancing customers' experiences and delivering precise ad messages, according to members of a panel at the National Retail Federation show at the Jacob K. Javits Convention Center in New York City. Panelists said that after a year of hype (2005) and a year of validation (2006), RFID will likely bring advancements in terms of how to apply the technology so businesses can glean and share information about customer behavior and their own inventory, then act on it.

Early adopters are already beginning to show how it's done.

Best Buy employees restocked and organized CDs and DVDs more frequently and more enthusiastically when RFID did some of their work for them. An RFID application that created a list of out-of-place and under-stocked items made the employees' jobs easier, said Mark Roberti, panelist and founder and editor of RFID Journal.

The technology can trigger surveillance cameras in some stores when an item or box goes into a dumpster out back. It also can mark the time an item left a stockroom and vanished, allowing investigators and prosecutors to view video footage from that time to build theft cases.

Now that the industry has published standards and moved the technology beyond its initial stages of development, companies are beginning to figure out how to use RFID to cut time and costs for customer service, training, and labor.

"Whether people have it at item-level tagging, or for the movement of assets, it's important that the retailer look at it holistically in order to get the full value," said Rachael McBrearty, VP of creative strategy for IconNicholson. "At the end of the day, the customer experience should come first."

IconNicholson offers ways to apply RFID while tapping into social networking, text messaging, and other trends, which can attract and entertain customers, while helping businesses understand them. The company also helps businesses build applications and interfaces that take advantage of the technology to improve supply chain management, inventory, and compliance.

Frank Cornelius, an advanced manufacturing engineer at New Balance, agreed that the main challenge for RFID implementation -- and focus of those in the industry -- is to figure out how to gain more business value from it. He said that his company used it in an item-level tagging pilot project in April 2006 and reported a 100% read rate, which means the system was able to track all of the merchandise. Now the company plans to use it for inventory in at least one store, although it will have people count the inventory to make sure the new technology is effective, Cornelius said.

Experts on the panel said RFID also will be integrated with online applications so customers inside stores can obtain the same type of information there that they dig up online.

Patrick Sweeney II, author of RFID For Dummies (ForDummies; 2005), said if companies want the level of success that New Balance is reporting, they should require 100% read rates and be sure to include language about the requirement in service level agreements.

Roberti said that trust and service would differentiate one retailer from another as stores begin using similar technology. He said customers would trust retailers if they have some control over the technology and believe the companies would use it to better-serve their needs, like replenishing the beer they just finished off.

Said Roberti, "That's where I would be looking with RFID."