Retail Experience - RFID in Retail
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Retail Experience - RFID in Retail

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RFID is an interesting technology that has generated a great deal of interest in the last few years. For this study, the focus is specifically on the impact of RFID technology in a supermarket.

RFID is an interesting technology that has generated a great deal of interest in the last few years. For this study, the focus is specifically on the impact of RFID technology in a supermarket.
By understanding the details behind RFID and clearing some misconceptions regarding privacy and security, this report aims to clarify the adoption of RFID in major supermarkets such as FairPrice.
Towards the end, we aim to provide a summarized solution on how RFID technology can benefit the store and the steps required to implement it in a supermarket.

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Retail Experience - RFID in Retail Retail Experience - RFID in Retail Document Transcript

  • Module: Design Practical 2 Assignment 2: RFID in Retail M.Des 1.1 Name: Harshal Desai Lecturer: Arabella Pasquette Date of Submission 21/12/2011 Word Count: 2334
  • TABLE OF CONTENTS EXECUTIVE SUMMARY .............................................................................................................. 2 INTRODUCTION......................................................................................................................... 3 RFID 101 ..................................................................................................................................... 3 WHAT IS RFID ......................................................................................................................... 3 HOW DOES IT WORK ............................................................................................................ 4 HOW IS IT DIFFERENT FROM A BARCODE ........................................................................... 5 TYPES OF RFID........................................................................................................................ 6 SECURITY CONCERNS .......................................................................................................... 7 WHERE IS IT ALREADY USED ................................................................................................. 8 RFID FOR CONSUMERS AND RETAILERS ................................................................................. 9 SETUP AND COSTS .................................................................................................................... 9 PROPOSED SOLUTION............................................................................................................ 10 Works Cited ............................................................................................................................ 12
  • EXECUTIVE SUMMARY RFID is an interesting technology that has generated a great deal of interest in the last few years. For this study, the focus is specifically on the impact of RFID technology in a supermarket. By understanding the details behind RFID and clearing some misconceptions regarding privacy and security, this report aims to clarify the adoption of RFID in major supermarkets such as FairPrice. Towards the end, we aim to provide a summarized solution on how RFID technology can benefit the store and the steps required to implement it in a supermarket.
  • INTRODUCTION One of the reasons for long lines at a checkout counter in supermarkets is barcodes. People visit grocery stores to purchase their items, the cashier scans the selection, there is an audible beep and a computer registers the amount to pay. Bar codes have been around for decades, and are literally on almost every product available today. However, an interesting fact would be that while barcodes were patented in 1952, it took them 30 years to become popular. (History of Bar Codes) There were only 15,000 suppliers using it in 1984. By 1987, there were 75,000 suppliers. The reason for the change??? Wal-Mart Wal-Mart is one of the biggest retailers on the planet. When Wal-Mart started using barcodes for their inventory listing, every other retailer began to catch up and the popularity of the barcode increased threefold. The same situation is occurring today, only now there is a new technology called RFID. When Wal-Mart speaks, the retail industry listens. Wal-Mart notified its top 100 suppliers to install RFID tags on all products by January 1, 2005. It is only a matter of time that RFID replaces the bar code. (Meloan, 2003) RFID 101 RFID technology was patented in 1973 (Genesis of the RDIF Tag), but its commercial applications are becoming more popular recently. WHAT IS RFID RFID are essentially Radio Frequency Identification microchips that do not require a direct line of sight in order to scan them. The tags can be used and reused multiple times if necessary and can be smaller than a grain of rice (Hitachi Unveils Smallest RFID Chip, 2003) The chips act as a transmitter and receiver, “listening” for a radio frequency sent by an RFID reader. The frequency activates the RFID tag and in turn it transmits a unique ID code back to the reader. The tags don’t run on batteries in most cases and are powered directly by the radio signal, making their lifespan technically limitless.
  • HOW DOES IT WORK RFID works on several operating frequencies depending on the type of range required for reading. FREQUENCY TYPE Low Frequency High Frequency Ultra High Frequency Microwave Frequency FREQUENCY RANGE 30-300 kHz 3-30 MHz 300MHz – 3GHz >3GHz SCANNING RANGE 50cm 3m 9m >10m Table 1: RFID Operating Frequencies (Dobkin, 2005) Singapore had widened its RFID frequency band in 2004 to ensure that their local inventory tracking systems will interoperate with those in Europe and U.S. and vice versa. Several major retailers that export goods to Singapore committed to invest more than seven million dollars towards improving RFID in the island city. (Singapore Widens RFID frequency, 2004) An RFID tag typically contains - Encoding/Decoding Circuitry A Memory Microchip Antenna Communication control chip
  • The tags cost up to 50 cents, however researchers from Sunchon National University in South Korea invented a new type of tag using ink laced with carbon nanotubes instead of the traditional silicon type. This considerably reduced the cost of production to 3 cents per tag. This is because instead of using a microchip, the tag could be directly printed as part of a package. (Grossman, 2010) HOW IS IT DIFFERENT FROM A BARCODE There are three primary differences between an RFID tag and a bar code. RFID tags are scanned via radio communications and do not require to be oriented in the direction of a scanning device. This means that RFID tags can be read through other objects, clothing etc. Certain types of tags could also be signalled from great distances, however for the purposes of a retailer such as FairPrice, one only needs a short distance (approx. 5-10 feet) in order to have a scanner identify an RFID tag. RFID tags also have a unique identification system. Bar codes generally indicate the type of item purchased, e.g. a carton of milk. What RFID does is not only indicate the product type but can also uniquely distinguish one carton of milk from the other cartons by using an encrypted serial code known only to the manufacturer and retailer. Lastly, bar code scanners require a laser beam to scan the codes individually. This takes up a lot of time and effort. RFID tags can be identified by a handheld scanner at the rate of 100 tags per scan. Theoretically, an individual managing an inventory for a supermarket would increase the speed and efficiency by 90% by using RFID technology. (RSA Labs - FAQ on RFID)
  • TYPES OF RFID There are three different type of RFID tags: Active (battery-driven), SemiPassive (also battery-driven) and Passive (activated through inductive energy of radio frequency), and are used in different applications. Active Tag Semi Passive Tag Passive Tag Power Source Battery on Tag Battery for Chip Operation Only. Radio wave Energy from Reader for Communication Radio wave energy from Reader for both Operation and Communication Tag Signal Availability Always on, 100 feet Only within field of reader Only within field of reader, less than 10 feet High Low Very Low Very Low Low Very High Signal Strength Tag Required Signal Strength from Reader Typical Applications Useful for tracking high-value goods that need to be scanned over long ranges Useful for high-volume goods, where items can be read form short ranges. Table 2: Comparison of RFID Tags (Meloan, 2003) For supermarkets such as FairPrice, a passive tag would be ideal. If the products would be marked with a passive tag, passing through the checkout gates would activate them via a signal, complete the transaction and then deactivate them. It reserves the privacy of the consumer at home too since the products need to be at very close ranges to an RFID reader in order to scan them.
  • SECURITY CONCERNS Many consumers would be worried about their privacy and security when it comes to using RFID tags for groceries. Certainly, one can buy items like a pair of jeans or a pack of cigarettes with anonymity today and it will not be the case with RFID technology. However, supermarkets already have methods to keep track of these purchases should they require it. Several CCTV cameras are installed in the store, and bar codes scanned are automatically inventoried as well. Regarding privacy at home, there are currently two methods to block RFID tags from being scanned once a purchase is complete 1. A kill command Probably the most direct approach to protect consumer privacy ensuring they don’t carry live RFID tags after purchasing the items from a store. A kill command is a special code that is sent out through the radio signal telling the RFID chip to permanently disable itself so it is no longer readable. These kill commands are known only to the manufacturer and retailer to prevent misuse 2. RSA Blocker Tag. These are special tags having a unique code that is unreadable by any scanner unless they have a correct authorization key. This means that only scanners that have access, for instant, supermarket scanners with a 256bit code (256 digit password), would be able to read the information from an RFID chip. This prevents unwanted scanning of purchased items and protects the privacy of the consumers. (RSA Labs - Protecting Consumer Privacy) It is crucial to understand that new technology does not just affect privacy but also solves critical problems. Researchers are constantly working to make RFID more reliable, pervasive and privacy-friendly. There will be some minor concerns about privacy, but they are no bigger risk than the issues people already have with social media and cellphones. RFID technology, at least for the supermarket, will ensure the security standards of the consumers are fulfilled and all data collected regarding purchases within the store is restricted to the retailer for overall market analysis of the products.
  • WHERE IS IT ALREADY USED RFID is already available in Singapore; cellphone payments, public transit cards such as the EZ link cards, ERP gantry, casino chip tracking, animal identification at the zoo, several inventory systems etc. Regarding supermarkets, Wal-Mart and MetroStore UK are the biggest users of RFID technology today. Wal-Mart even has a published requirement mandate that guides vendors about placing RFID tags on products. Considering the size of this organization, this mandate impacts thousands of companies worldwide. Singapore’s Infocomm Development Authority (IDA) is already working on creating a multi-frequency RFID tag that can be used globally. Regarding supermarkets, they are focusing on FairPrice and the Grocery Logistics of Singapore (GLS) to deploy RFID in their distribution centers for product tracking. It is only a matter of time before they open the technology for consumer benefits too. (Singapore's RFID Journey, 2004) In fact, two of Singapore’s fashion retailers are already using RFID technology for their products, specifically to manage their inventory. They are Bella East Fashion Studio and 77th Street Pte. Ltd. They adopted RFID in early 2007 and using passive tags to ensure the privacy of their consumers. Currently the employees are responsible for placing the tags on their products, but they are hoping to have the manufacturers even take control and tag the garments themselves. (Swedberg, 2007) One of the most recent applicants, a company named ShelfX created smart shelves with RFID capabilities and is currently testing their products in local stores in Colorado, United States as of late October this year. (Smart Figure 1: ShelfX technology (Source: http://www.shelfx.com/shelfx-news) Shelves Abolish Lines at Supermarket, 2011)
  • RFID FOR CONSUMERS AND RETAILERS Using RFID technology will enable real-time inventory mapping for retailers. The entire point of this is to keep track of their supply both through their distribution centers and warehouses. By doing so, the retailers can ensure their products are rarely out of stock, since items that are near depletion would be notified to the staff and either have them ordered directly through a software or manually depending on retailer’s needs. Since RFID contains unique identifying content for every product, its also possible to track expiry dates of each item within the store and even during the inventory process at warehouses. This virtually guarantees alerting the staff when an product is past its expiry date and would contribute towards supplying better quality products to the consumer. Regarding consumers, RFID technology means not having to wait in lines. Complete control is given to the consumer to just pick the items they require and simply walk out. A receipt dispenser would be kept at the end just as a safeguard to put the consumer’s mind at ease that they weren’t overcharged. (Prater & Frazier, 2005) SETUP AND COSTS To carry out the initial experiment, each shelf costs around $10 per installation, including the cost of the server. To have an RFID shelf based system setup and running across an entire store, there are a few criteria that must be satisfied. 1. Scanning the area to for existing radio frequencies. Its essential that these frequencies don’t interfere with the ones emitting from the RFID tags. 2. Setting up a server in the store to maintain communication with the RFID tags 3. Setting up the scanning gates at the store and linking them with computers that monitor and track the items purchased for inventory
  • purposes. This also constitutes of tracking the number of items remaining on the shelves and a system to alert staff in case of errors or when any item is close to running out of stock. 4. Software upgrades on the computers to get real time inventory monitoring and automated ordering, along with collecting valuable real time statistics of products. Since the system relies mostly on wireless communication, there isn’t much wiring and setup required and the process is relatively quick and easy. Extra cost would be required in terms of salary for an on-hand technician for the possibility of an event where the system malfunctions. When consulted with the manager of ShelfX technologies, sharing with him the size of a FairPrice Xtra store and the type of items, initial costs of a full setup are estimated at $40000. PROPOSED SOLUTION Considering a hypermarket such as FairPrice, our ideal solution would be to use a variant of ShelfX technology on a small section of FairPrice products to test the feasibility before revamping the entire store. The first step would be to conduct market research on the top 30 essential items bought by the target consumer and place them in a special area having RFID enabled smart shelves. Consumers would be given a special payment card, similar to an EZ Link card and encouraged to purchase items via tapping the card onto the shelf and taking the necessary products. The next step is for them to simply walk through the RFID scanners placed a few meters before the exit, take the receipt issued by a device near the scanner and walk out. This will automatically make the consumer realize the potential of RFID technology as it eliminates the conventional queuing system. Another feature that can be added is a guarantee clause to ensure consumers they won’t be overcharged by using RFID. They can build up trust
  • by giving a promotion stating that if any consumer finds that they were overpriced, not only will that item be given for free, but their entire shopping list purchased in that day will be free of charge. The error rate of passive RFID tags has reduced considerably from the 10% back in 2006 to just 2% in 2011. It should be adequate for the store to provide such a guarantee. (Elamin, 2006) Since the obvious drawback is for people who are persistent on paying cash, there should always be a few traditional cashiers in the store. This will not only give consumers a choice, but also help in making an even clearer distinction within their minds. Once those who are standing in line, see that other consumers are just walking out with ease, they will naturally gravitate towards the RFID solution. This should be an ideal method to allow a smooth transition for the consumers towards the new RFID system: Tap, take, walk out. To see a demo of the proposed solution, please visit the following link: http://on.fb.me/th6ika
  • WORKS CITED Hitachi Unveils Smallest RFID Chip. (2003, March 14). Retrieved December 19, 2011, from RFID Journal: http://www.rfidjournal.com/article/articleview/337/1/1/ Singapore Widens RFID frequency. (2004, November 5). Retrieved December 19, 2011, from Fibre2Fashion: http://www.fibre2fashion.com/news/NewsDetails.asp?News_id=10698 Singapore's RFID Journey. (2004). Retrieved December 19, 2011, from IDA Singapore: http://www.itu.int/osg/spu/ni/ubiquitous/Presentations/4_poon_RFID.pd f Smart Shelves Abolish Lines at Supermarket. (2011, October 27). Retrieved December 19, 2011, from ShelfX: http://www.shelfx.com/news/shelfxsmart-shelves-abolish-lines-and-offer-retailers-enhanced-inventorymanagement Dobkin, D. (2005, October). RFID Frequency Bands. Retrieved December 19, 2011, from Enigmatic Consulting: http://www.enigmaticconsulting.com/Communications_articles/RFID/RFID_frequencies.html Elamin, A. (2006, October 03). Multiscan RFID uses reflectors to reduce errors. Retrieved December 19, 2011, from FoodProductionDaily.com: http://www.foodproductiondaily.com/Supply-Chain/Multi-scan-RFIDuses-reflectors-to-reduce-errors Genesis of the RDIF Tag. (n.d.). Retrieved December 19, 2011, from RFID Journal: http://www.rfidjournal.com/article/articleview/392/1/2/ Grossman, L. (2010, March 26). The End of Bar Codes. Retrieved December 19, 2011, from Wired.com: http://www.wired.com/wiredscience/2010/03/rfid/ History of Bar Codes. (n.d.). Retrieved December 19, 2011, from About.com: http://inventors.about.com/od/bstartinventions/a/Bar-Codes.htm Meloan, S. (2003, November 11). RFID. Retrieved December 19, 2011, from Sun Developer Network: http://java.sun.com/developer/technicalArticles/Ecommerce/rfid/
  • Prater, E., & Frazier, G. (2005). Future Impacts of RFID on e-supply chains in grocery retailing. Supply Chain Management: An International Journal, 134-142. RSA Labs - FAQ on RFID. (n.d.). Retrieved December 19, 2011, from RSA LAboratories: http://www.rsa.com/rsalabs/node.asp?id=2120 RSA Labs - Protecting Consumer Privacy. (n.d.). Retrieved December 19, 2011, from RSA.com: http://www.rsa.com/rsalabs/node.asp?id=2119 Swedberg, C. (2007, October 31). Two Singapore FAshion Retailers Use RFID to Track Inventory. Retrieved December 18, 2011, from RFID Journal: http://www.rfidjournal.com/article/view/3721