Consumer Protection Issues: A Retail Perspective


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  • METRO Group is one of the most important international retailing companies. In 2005 the group reached sales of € 55.7 billion . The company has a headcount of about 250,000 employees and operates more than 2,100 outlets in 30 countries. The operating business is performed by the sales lines which operate independently in the market: Metro/Makro Cash & Carry – world market leader in cash & carry wholesale, Real hypermarkets and Extra supermarkets, Media Markt and Saturn – market leader in consumer electronics centers in Europe, and Galeria Kaufhof department stores
  • Flexibility and innovation are increasingly important in the international retail sector. In this connection, the METRO Group recognized early on that the development and application of modern technologies are a key competitive factor. Our objectives : To make the entire supply chain more efficient – from the production to the store. To offer customers a faster, more comfortable and more individual shopping experience . To develop uniform standards , because in the international retail sector, it must be possible to exchange information between companies and across national borders. The METRO Group develops and tests innovations for the future of retailing together with over 60 partners in the METRO Group Future Store Initiative . The cornerstones of this initiative are the Future Store and the RFID Innovation Center .
  • The first major joint project is the Future Store – the test platform of the Initiative . Since opening in Rheinberg in April 2003, the application and interplay of various innovative technologies are tested here under real conditions. In addition, tests are conducted to determine efficiency and cost-effectiveness . Furthermore we are testing the acceptance of the technologies among our customers.
  • A large number of technologies are used at the Future Store – from Information Terminals and Smart Scales to Personal Shopping Assistants and Smart Check-outs. However, the key technology is Radio Frequency Identification (RFID).
  • Initially, the retail sector used conventional price tags which were then replaced by bar codes. The future comes in the form of a tiny computer chip with an antenna: RFID . The so called “Smart Chips” or “transponders” are already used in many different industries – in the logistics, in public transport, in libraries, just to give you a few examples. In the retail sector, a number is stored on the transponder. This number is the Electronic Product Code , or EPC for short. The EPC is linked to product information like the price, the producer or the best before date, which are stored in a data base. The major advantages of RFID compared to the barcode: Product data can be transferred without physical contact. Furthermore, the EPC gives objects an unmistakable identity .
  • In November 2004 , the METRO Group began the roll-out of RFID along the entire supply chain. Our RFID applications are mainly focused on the incoming goods area, the outgoing goods area and the inventory replenishment . Currently over 40 partners from the consumer goods industry are sending us pallets with RFID transponders . In these days we are also starting to tag individual cases with RFID chips. When these pallets or cases arrive in a distribution center or store, the load is automatically read and entered into the merchandise management system . Since the palette only has to pass through an RFID gate, the time-consuming process of reading all bar codes is eliminated. 22 locations of Metro Cash & Carry, Real, Kaufhof and the METRO Group distribution centers are using the innovative technology.
  • However, our vision goes one step further: we firmly believe that – in 10 to 15 years – every article will be tagged with an RFID chip . Besides improving logistical efficiency, this will make new and highly interesting applications possible: A prime example of this is the Smart Dressing Room , which uses its RFID reader to detect automatically which item of clothing the customer would like to try on and gives information about available sizes and other matching items. Another pioneering application is the Smart Shelf , which uses RFID technology to detect early on when a certain article is running short and then sends a message to store employees. In this way, empty shelves will become a thing of the past. The same goes for long queues at the check-out. In 10 to 15 years, it could be possible for customers simply to push their trolleys through an RFID gate at the exit , which will register all of their purchases in a matter of seconds. RFID will spare shoppers the necessity of placing items on the belt and then back into the trolley again.
  • As you can easily imagine, RFID offers many key advantages for retailers and consumers alike. As retailers, RFID helps us to accelerate our processes and make them more transparent – as in the incoming goods scenario mentioned earlier – and to reduce inventory levels . RFID increases the efficiency of our processes. What is more, with the aid of this technology, the availability of goods in the stores can be increased and quality assurance can be improved . RFID can also help to reduce counterfeiting , since every single article has a unmistakable identity This innovative technology is the key to secure our competitiveness on international markets. Consumers also have major benefits from RFID: With RFID, it is possible to provide consumers with additional product information – for example by demonstrating the continuous maintenance of the cold chain. Consumers also benefit from the improved availability of goods – there is nothing more annoying than being faced with an empty shelf. RFID makes the check-out process faster and more comfortable , since the articles no longer have to be placed on the belt. All the consumer has to do is push the trolley through an RFID gate. Furthermore, the technology allows consumers to exchange goods more comfotable , even when they no longer have the receipt.
  • At present, we are using RFID technology primarily to enhance the efficiency of our logistics processes. In spite of this, data protection is a priority for us. Within the framework of EPCglobal, the METRO Group has committed itself to using RFID technology in a responsible way. 1. Consumer Education The METRO Group informs consumers about RFID technology in various brochures, in a newsletter and online. As well as this, there is a telephone hotline for dealing with consumers’ questions on this subject. 2. Consumer Notice It is of the utmost importance to us to provide our customers with honest and extensive information about the use of RFID. Accordingly, every RFID chip and every RFID reader is indicated clearly. There is also a notice at the store entry. 3. Consumer Choice The METRO Group was the first retailing company in the world to develop a “De-Activator.” This enables customers to deactivate the Smart Chips on articled permanently. Smart Chips on cartons can be made useless during the check-out. 4. Record use, retention and security The Electronic Product Code does not contain, collect or store any personally identifiable information. The EPC refers only to product- and process-related information.
  • Consumer Protection Issues: A Retail Perspective

    1. 1. Consumer Protection Issues: A Retail Perspective Petra Rob General Manager METRO Group STOA Workshop, June 6, 2006
    2. 2. METRO Group – one of the most important international retailing companies 1 METRO Group
    3. 3. Driving force for technological innovations in the retail sector <ul><ul><li>The METRO Group is a driving force behind the development and application of new technologies in the retail sector </li></ul></ul><ul><ul><li>Our objectives </li></ul></ul><ul><ul><ul><li>To make the entire supply chain more efficient – from production, through distribution centers to incoming goods areas in the stores </li></ul></ul></ul><ul><ul><ul><li>To offer customers a faster, more comfortable and more individual shopping experience </li></ul></ul></ul><ul><ul><ul><li>To develop uniform standards </li></ul></ul></ul>Bundling of innovation-oriented activities in the Future Store and the RFID Innovation Center 1 METRO Group
    4. 4. The Future Store in Rheinberg (Germany) <ul><ul><li>Opened in April 2003 </li></ul></ul><ul><ul><li>First joint project of the METRO Group Future Store Initiative </li></ul></ul><ul><ul><li>Function of the Future Store </li></ul></ul><ul><ul><ul><li>To test the application and interplay of innovative technologies under real conditions </li></ul></ul></ul><ul><ul><ul><li>To determine efficiency and cost-effectiveness </li></ul></ul></ul><ul><ul><ul><li>To test the acceptance of these technologies among customers </li></ul></ul></ul>2 METRO Group Future Store Initiative
    5. 5. Connection to the central merchandise management system Employee PDAs Wireless Bluetooth peripherals Information Terminal Self Check-out Personal Shopping Assistant Smart Scales Access Points Customer PDAs Wireless workspaces Advertising Displays RFID Smart Shelf Future Store – an overview of the technologies 2 METRO Group Future Store Initiative
    6. 6. Key technology for the future of retailing <ul><ul><li>The heart of RFID technology: the transponder or “Smart Chip” </li></ul></ul>Transferring product data without physical contact through Radio Frequency Identification (RFID) <ul><li>Electronic Product Code (EPC) gives objects an unmistakable identity </li></ul>Tomorrow Yesterday – Today 3 RFID in the METRO Group
    7. 7. RFID application today <ul><ul><li>The roll-out of RFID along the entire METRO Group supply chain began in November 2004 </li></ul></ul><ul><ul><li>RFID application focused mainly on: incoming goods, outgoing goods, inventory replenishment </li></ul></ul><ul><ul><li>RFID transponders on: pallet-level and case-level </li></ul></ul><ul><ul><li>22 locations in Germany: Metro Cash & Carry, Real, Kaufhof and METRO Group distribution centers use the innovative technology </li></ul></ul>3 RFID in the METRO Group
    8. 8. RFID application in the future <ul><ul><li>Our vision: RFID at item level </li></ul></ul><ul><ul><li>This will pave the way for many innovative applications. A few examples: </li></ul></ul><ul><ul><ul><li>Smart Dressing Rooms that provide additional information on individual items of clothing that the customer wishes to try on </li></ul></ul></ul><ul><ul><ul><li>Smart Shelves that automatically inform store employees when a particular article is running short </li></ul></ul></ul><ul><ul><ul><li>Future Check-out, which allows articles in a shopping trolley to be read without the need to place them on the conveyor belt </li></ul></ul></ul>3 RFID in the METRO Group
    9. 9. RFID – future technology with key advantages for retailers and consumers <ul><ul><li>RFID technology allows retailers to … </li></ul></ul><ul><ul><ul><li>Accelerate processes in the supply chain and make them more transparent </li></ul></ul></ul><ul><ul><ul><li>Reduce inventory levels </li></ul></ul></ul><ul><ul><ul><li>Increase the availability of goods in stores </li></ul></ul></ul><ul><ul><ul><li>Continue improving quality assurance </li></ul></ul></ul><ul><ul><ul><li>Reduce counterfeiting </li></ul></ul></ul>4 Benefits of RFID <ul><ul><li>RFID technology offers consumers … </li></ul></ul><ul><ul><ul><li>Additional product information </li></ul></ul></ul><ul><ul><ul><li>Better availability of goods in stores </li></ul></ul></ul><ul><ul><ul><li>Better service and a more interesting shopping experience </li></ul></ul></ul><ul><ul><ul><li>Faster check-out </li></ul></ul></ul><ul><ul><ul><li>Comfortable exchange of goods without having to keep the receipt </li></ul></ul></ul>RFID is a innovative technology from which both consumers and retailers can benefit in equal measure
    10. 11. Shaping the future of retailing today Thank you!