SA supermarkets scorn RFID

By Warwick Ashford, ITWeb London correspondent

Johannesburg, 22 Nov 2006

Radio frequency identification (RFID) technology is unlikely to be introduced into South African supermarkets in the next couple of years. This is despite its proven ability to improve product availability and its significant potential to reduce theft by staff, customers and delivery companies.

This is one of the key messages that emerged at yesterday's RFID conference, hosted by the Smart Card Society's Afritag Forum, on the East Rand.

Procter and Gamble told attendees that RFID had cut supply time from three weeks to three days in a trial in the US. It said that according to the Consumer Goods Council of SA, RFID could significantly reduce supermarket goods theft of R4.1 billion a year. However, Shoprite Checkers said it was still too expensive.

"Item-level tagging is necessary for RFID to work in the fast-moving consumer goods (FMCG) market, but the narrow margins make it still too expensive," said Ray Neethling, IT project manager for Shoprite Checkers.

Neethling explained that although RFID tag costs were coming down, the combined cost of the tags and necessary support infrastructure of equipment and data systems, was still about 26c an item. He said it would have to be below 1c an item to be viable.

"Supermarket groups are still waiting to get a return on their investment in item-level bar-coding, so it will be some time yet before there is a compelling reason to invest in RFID," he said.

Long wait

Although the local FMCG market would have to wait before implementing RFID, Neethling said there was already a business case for other retail sectors. He said there was definitely a business case for high-value, high-margin goods such as clothing and furniture.

While Neethling said local supermarkets would be best advised to wait and learn from European and US retailers, Eurotag chairman Chris Turner urged local players to become members of EPCglobal.

Turner said EPCglobal membership would help South African companies keep abreast of the latest developments in RFID technology, particularly with regard to item-level tagging. He said EPCglobal was at the forefront of developing standards and specifications to make this a reality.

"SA must watch what's happening in Europe and elsewhere in the world so it can avoid making the same mistakes," he said.

International RFID consultant Ian Pattison said SA should expect concerns over the use of RFID, particularly with regard to privacy. He said it was therefore important to keep consumers informed about RFID and ensure all the necessary security precautions were taken.

Pattison said with the adoption of any new technology, the human factor was an important consideration. He said experience in Europe had shown that early adopters would have to sell the benefits of RFID to customers and employees to avoid a negative response.