March 10, 2003, 12:00 AM

RFID primed for growth in the retail industry

With Wal-Mart and other large retailers such as Home Depot and Target signed up as members of an industry group committed to RFID`s development, the use of radio frequency identification systems is expected to mushroom.

Although projections of the retail industry`s investment in radio frequency identification, or RFID, are sketchy, it`s easy to see how fast the product-tracking technology will grow, Peter Abell, a supply chain analyst for AMR Research Inc., tells Internet Retailer. He notes that Wal-Mart Stores Inc. has said it plans to have all containers and pallets it receives RFID-tagged by early 2005. "That`s tens of billions of tags, and that`s just Wal-Mart," Abell says.

With other large retailers, such as The Home Depot Inc. and Target Corp., signed up as members of the Auto-ID Center, an industry group committed to RFID`s development, the use of RFID systems will mushroom over the next several years, he adds.

And as RFID projects become more common in retail, they`ll migrate more and more to a web-based system, experts say. Right now, most RFID projects operate over private networks. For example, a pallet of RFID-tagged containers passes by a reader when it arrives in a store. The reader identifies and records the products’ SKUs and serial numbers. It also forwards that information over a private network to update a corporate database, such as in a merchandising management system, or to pull more information from a database to further describe the products in the containers.

But RFID proponents foresee a more ambitious use that would send such information over the Internet for a broader range of connections. That capability would allow information on delivered goods to be exchanged with databases outside a corporate network, such as in a supplier’s back-end system. So if a retailer needs more information on what’s inside RFID-tagged containers, for example, the RFID reader will identify the SKU and serial numbers and read any other information on the tag, then pull additional information that’s still needed through an Internet connection with the supplier’s databases.

“Objects will communicate through the Internet,” says Greg Gilbert, director of RFID strategies for Manhattan Associates Inc., a provider of supply chain software and a member of the Auto-ID Center. “So when you read an RFID tag, you can communicate through Internet protocols with a database that has the information you need.”


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