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Another Way to Look at the WalMart RFID Initiative

Here's another article in the continuing debate about the viability of RFID for the retail sector. Basically, the author casts doubts on the ability of RFID to show savings in the check-out portion of retail, contending that the only savings will be in the warehouse portion. From Forbes, the money quotes:

"Unfortunately for manufacturer and distributors selling to large retailers, RFID has a much lower return on investment for them than for their retail customers," says Steve Banker, an analyst at Medford, Mass.-based ARC Research, a leading research and analyst group dealing with supply chain, logistics and manufacturing. "The situation is more difficult because the technology is immature, and the quality and reliability of current tag shipments reflect that immaturity."

And:

The conclusions of AMR Research's report are potentially even darker for full-scale implementation of RFID technology in large retail stores. Use of such technology based on pallet and case tagging will not generate revenue to add appreciably to the bottom line, the report says. This means that with today's technology--and today's costs--RFID is not economically justified for retailers.

Comments

For the last 5 years, to me its been all about tag and reader costs compared to barcodeing equipment and tags. Volume sales of both will drive costs down. You have to wonder whether the intial mandates by WalMart and others will provide the impetus needed to overcome the problems of gathering, storing, organizing and reporting the data generated by RFID, and whether the technology will catch on in the volume required to improve reliability and reduce costs.

I just got back from grocery shopping, and at checkout I had the choice of using one of the 6 the "self-checkout" aisles, or one of the 4 much more crowded cashier lines. Still dreaming of the day when I pull up the cart to a RFID gateway and the checkout is done in less than a minute. Hope there are enough savings incentives so that it happens soon.