Retail chip technology requires commitment

By Anita Awbi

- Last updated on GMT

Related tags Retailing

Metro Group's innovative radio chip technology has the potential to
changethe face of food retail - but only if major retailers and
suppliers caneffectively work together to homogenise current
labelling standards.

Metro spokesperson Albrecht von Truchseß told​ that suppliers and retailers must start using a universalstandardisation of electronic product codes (EPC) for their revolutionarynew system to go ahead.

He said current labelling disparity need be addressed in order to movetowards product label homogeny, and revealed that major retail companies and governments are already working towards developing a collective system.

"We have found that everybody is committed to the standardisation - Japan, Europe, and the US are condoning the move, and big drivers such as Proctor and Gamble, Tesco and Wal-Mart are supporting the initiative,"​ said Truchseß.

German-based Metro Group, the world's fourth largest retailer, is working in conjunction with the likes of IBM, Microsoft, Visa, Kraft and Henkel todevelop an interlinking computer-aided chip system that governs the retailprocess from supply to point-of-sale.

The core technology uses radio frequency identification (RFID), and isalready a requisite for traders supplying manufacturing products to Nestle,Coca-Cola, PepsiCo, Kraft and Unilever.

However the technology still faces a number of obstacles. In addition to the need for label homogenisation, it has also been criticised outside theretail industry as human rights activists argue that RFID is intrusive andsacrifices consumer privacy for retail efficiency.

They worry the technology will be used to track customers movements.

"It is a horror scenario. But this is not really a drawback because it is something we take very seriously,"​ Truchseß said.

"We are not going to construct a connection between consumer data andproduct data because we know this concerns people,"​ he added.

RFID 'smart chips', containing computer chip and miniature antenna, areattached to goods at production stage. They store useful information andallow for instant product identification and tracking. But at a relativelyhigh cost, currently 30 euro-cents apiece, the smart chips are only used onpalettes in the supply chain.

The next stage of Metro RFID development will see smart chip technologyapplied to single products in food stores to power information terminals,improve stock management and enable effective self-check out. Butconsumers will have to wait for at least 10-15 years for a unilateralrollout of this tracking method.

"At the moment the technology is too expensive to use on single items,"​ said Truchseß.

"At 30 cents for each tag, we cannot feasibly put these on every yoghurt for example, as they cost more than the product. But we do expect the price to come down dramatically as we develop a new plastic RFID tagging."

RFID is currently acknowledged as providing the highest level of security to retailers, greatest convenience in stock management, and the most product information to consumers.

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