- I'm in a supermarket called the Extra Future Store in
Rheinberg, Germany, 40 kilometers north of Dusseldorf, jonesing for a bit
of Philadelphia cream cheese. I feed my request into the touchscreen console
on my shopping cart, and up pops a map showing the optimal path to the
dairy section. I steer over and grab a box - regular in name but far smarter
than the average cream cheese. The package carries a computer chip that
talks to a 2-millimeter-thin pad lining the shelf under the box. When I
pick up the cheese, sensors in the pad notify the store's database that
the box has been removed. I exchange the plain for the mit Kruter (with
herbs) then, wracked with indecision, snag the low-fat version. It turns
out it's not really all that low-fat anyhow, so I put it back down. My
waffling will produce a flurry of data back at Kraft Foods headquarters.
The company, which gets this information in return for subsidizing the
smart shelf and the microchips attached to the packages, will use the data
to analyze my behavior. The marketing department will likely draw some
kind of conclusion from my skittishness - a hint that maybe "low-fatness"
is too Spartan a theme for a hedonistic schmear anyway. Of course, they'll
also have serious insight into my personal shopping habits.
-
- My companion is a sloe-eyed, dark-haired young woman
named Silke Michel, who holds one of the world's rarer jobs: supermarket
tour guide. More than 10,000 people have visited the Future Store in the
past year - not including the real live shoppers of Rheinberg, who have
become adept at maneuvering their carts around herds of pinstriped looky-loos.
The visitors come from all over the world for a preview of the global retail
experience, circa 2013. The star of the show is the radio frequency identification
chip - a piece of circuitry about the size of a grain of sand. Thanks to
the coordinated efforts of the world's biggest retailers and manufacturers,
not to mention the persistence of former lipstick marketer Kevin Ashton,
these little tags are about to infiltrate the world of commerce.
-
- Depending who you ask, RFID tags constitute
-
- 1. the best thing to happen to manufacturing since the
cog.
-
- 2. the biggest threat to personal privacy since the crowbar.
-
- 3. the near-exact fulfillment of the Book of Revelation's
description of the mark of the beast.
-
- There's a compelling argument for each of these perspectives
- including number three.
-
- European retailer Metro built the Future Store to be
the premier live testing ground for RFID tags, and the world's biggest
consumer goods manufacturers are lining up to have a gander. Gillette,
Kraft, and Procter & Gamble are among the companies banking on RFID
chips to track each cream cheese container, razor blade, and bottle of
shampoo. They know precisely which package occupies what bit of shelf space
and how long it takes the Future Store's staff to replace a purchased item.
-
- Retailers are even keener to get their hands on the sort
of information RFID tags promise to reveal. The way it works now, all the
little kinks along the supply chain accumulate in the lap of retailers,
which take delivery of products without knowing whether the shipments are
correct until they're unpacked. The average rate for shipping screwups
is 1 in 20. That's a big part of why margins in the retailing business
are so thin - average net profit for supermarkets is 1 percent - and precisely
the reason that Wal-Mart, Target, and Metro have given their top suppliers
six to nine months to start slapping RFID tags onto crates and delivery
pallets. Manufacturers want this technology, but retailers need it.
-
- When talking to people in the RFID business, you hear
a lot about Fortune One, aka Wal-Mart, the top company on the Fortune 100,
which rose to power by understanding the supply chain better than any of
its competitors. The pitch RFID vendors make to retailers boils down to
this: You, too, can take control of your supply chain. You can be like
Wal-Mart. You can save millions - billions! - of dollars. The Future Store
stockroom serves as the model. Michel points to a reader at the entrance
to the loading dock that logs the arrival of any RFID-tagged contents,
all but eliminating foul-ups.
-
- Back in the aisles, antennas suspended from the ceiling
track our position, and a server beams information about specials to our
cart's console. The prices on the 35,000 remote-controlled LCD labels flickering
on the shelves rise or fall each night with inventory levels. Throw that
10-pack of juice boxes into the cart when there are still two pallets in
the back room and it could cost you 1.99 euros. But show up after a Saturday
afternoon rush and you'd be looking at 2.53 euros.
-
- After choosing a bottle of Pantene shampoo (P&G will
be interested to know that I opted for the glatt und seidig variety only
after picking up a different bottle first), we make our way to the DVD
section. Michel picks Verr¸ckt nach Mary off the shelf, the German-dubbed
version of There's Something About Mary, and holds the RFID-tagged package
up to a video kiosk. The movie's trailer starts, and we share a chuckle
as Cameron Diaz answers the door sporting a hairstyle product not sold
in stores.
-
- As a rule, I loathe going to the supermarket. But this
is actually fun - like a multimedia scavenger hunt. It's as though the
store is reaching out to help me, entertain me, and, yes, take my money.
Ultimately, the store hopes to have every item tagged. Until then, it boasts
several futuristic features that use barcodes as temporary stand-ins for
RFID. A produce kiosk equipped with a digicam and identification software
prints price stickers for fruits and veggies based on size, color, and
shape; a sommelier kiosk regards a bottle of wine, tells me the appellation,
suggests accompanying dishes, and compares vintages. Best of all, once
the store becomes RFID-saturated, I'll be able to breeze out to my car
without breaking stride - a scanner will read the tags in my cart and debit
my bank account, just like a shopping-floor E-ZPass. I just hope the bag
boy can keep up.
-
- In 1997, a fresh-faced P&G cosmetics marketer named
Kevin Ashton noticed that practically every time he checked the shelves
of various British retailers for Oil of Olay Hazelnut lipstick, they were
empty. Peeved, Ashton sought a technical fix and came across RFID tags.
At a few dollars each, they were way too expensive to put on every consumer
product. But Ashton knew the tags could be manufactured at a fraction of
that cost, especially if, say, P&G were to order them in huge volume.
"I started giving my RFID presentation to anyone who would listen,"
says Ashton, who now heads marketing for ThingMagic, a designer of RFID
systems, "and they kept passing me up the chain."
-
- A year later, P&G "loaned" Ashton - a brand
manager with a bachelor's degree in Scandinavian studies - to MIT as the
executive director of the Auto-ID Center, an offshoot of the Media Lab
funded with $20 million from P&G, Gillette, Kraft, Unilever, Wal-Mart,
Home Depot, Coke, and just about every other major retail brand you can
think of. Ashton and his team of PhDs predicted that RFID would usher in
a new age of business-process clarity and corporate profitability - when
the cost falls from 10 to 5 cents a tag. The reams of data would also give
sellers new insight into consumer behavior, more control over pricing,
and better-targeted in-store promotions.
-
- How could a tiny chip do all this? It starts with the
technology. The key pieces of hardware are a radio transmitter and receiver
(the RFID reader) and a tag (chip plus antenna). Metro uses passive RFID
chips, which remain inactive until the radio frequency energy from a reader
hits it, giving the tag enough juice to emit a 96-bit digital signature,
three times the information held in a barcode. The chip can be read through
cardboard, wood, and plastic, which means that manufacturers can actually
embed them in products. Some of today's readers have a 30-foot range and
are the size of a quarter. As far as the chips go, well, they're closing
in on that magic 5-cent figure.
-
- The tags will have the most immediate impact on retailers.
Wireless receivers can track the whereabouts of every item, eliminating
inventory errors of all sorts: the mysterious disappearance of a few cases
of Coke here and there, a pallet of perishables left to rot in some far-off
warehouse corner, the 64 dozen boxes of cashews improperly logged as cat
chow. A handy supply-chain calculator on the Web site of EPC Global, the
current incarnation of MIT's Auto-ID Center, makes the case quite convincingly.
You can punch in the numbers yourself: A retailer with, say, $250 billion
in sales and 103 distribution centers (OK, Wal-Mart) would, based on industry-average
operating margins, see $407 million in savings by having its suppliers
attach RFID tags to all their pallets. By requiring an RFID tag on every
item, Wal-Mart would save $7.6 billion, mostly in labor costs - think of
all the employees with barcode scanners who staff the loading bays, warehouse
aisles, and checkout counters. And then there are the incalculable new
business opportunities that would come with the ability to do true one-to-one
advertising at the point of purchase.
-
- ThingMagic, Ashton's startup, now finds itself in a very
hot field. Alien Technology, another RFID equipment maker, has raised more
than $50 million in venture capital on the strength of Gillette's promise
to buy up to 500 million Alien RFID tags at a reported 10 cents each. Another
chipmaker, Matrics, recently pulled in a $20 million round. Supermarket
giant Albertson's, with 2,300 stores nationwide, has said its top 100 suppliers
must put RFID tags on all boxes and pallets they ship by next April. Starting
next year, Michelin is putting chips in its tires as a way to minimize
costly recalls like the Firestone-Ford debacle of 1999 and 2000. And Wal-Mart
began experimenting with RFID on consumer goods in May. Seven Dallas-Ft.
Worth Wal-Marts are tagging Hewlett-Packard, Johnson & Johnson, and
P&G products. The resulting avalanche of data will be a windfall for
tech firms; IBM, Oracle, and SAP all turned out for the recent RFID summit
in Chicago.
-
- "And he causeth all, both small and great, rich
and poor, free and bond, to receive a mark in their right hand, or in their
foreheads." Katherine Albrecht is reading aloud from chapter 13 of
the Book of Revelation. " and that no man might buy or sell, save
that he had the mark, or the name of the beast, or the number of his name.
Here is wisdom. Let him that hath understanding count the number of the
beast; for it is the number of a man; and his number is six hundred threescore
and six.'"
-
- This is no wild-eyed street preacher. Albrecht is a Harvard
PhD candidate in educational psychology and a reliable media staple, appearing
on seemingly every TV or radio talk show on the topic of RFID. Red-haired
and apple-cheeked, she's wearing a tasteful sweater with a silk scarf draped
around her shoulders. Albrecht is the founder of Caspian, Consumers Against
Supermarket Privacy Invasion and Numbering. She's well-informed, appealing,
and adept at rebutting the pro-RFID arguments of industry shills and tech
wonks. Most of all, she sees the danger and she's spreading the word. If
Ashton is RFID's Johnny Appleseed, Albrecht is Erin Brockovich.
-
- Albrecht began worrying about supermarkets in 1998. Looking
at all the retailer loyalty cards in her wallet, she got to thinking about
the databases behind them, wondering how information on her every transaction
would be analyzed, used to influence her purchasing decisions, and sold
to others. When RFID came along, she attended an Auto-ID Center meeting
at MIT and heard a marketer say, "Won't it be great when we know every
time the consumer takes the lid off the toothpaste in their own bathroom?"
Realizing that the tiny chips were more powerful - and troubling - than
loyalty cards ever could be, she took Caspian on the warpath against RFID.
-
- Feature: Attention, Shoppers! Plus: Shopping Cart Revolution
Last summer, Gillette, Wal-Mart, and Britain's Tesco stores canceled RFID
pilot projects that involved clandestine videotaping of razor shoppers
after Albrecht found out and organized a Gillette boycott. This spring,
Albrecht spent hours on the phone with staffers to US senator Patrick Leahy,
preparing him for public hearings on RFID regulation. Three states have
taken up her cry to require retailers to label any items that have RFID
tags attached: California and Utah legislators have proposed versions of
her labeling bill, while Missouri's senate has introduced it nearly word
for word.
-
- As a free-market libertarian, Albrecht believes the new
California legislation is too extreme: It goes beyond just labeling - it
bans tracking customers as they shop. Albrecht has no problem with RFID
tags being used inside a store to improve supply-chain efficiency. It's
the point at which you bring the tags home that worries her. Outside the
store, she fears, the tags become beacons, broadcasting all sorts of information
to anyone with an RFID reader. And the readers are so cheap that anyone
will be able to check out what you've bought without your noticing.
-
- For every bit of convenience RFID offers, Albrecht sees
a potential invasion of privacy. Consider the clothing manufacturers who
weave chips into their lines. According to Chris Enright, the CTO of IconNicholson,
the firm that helped design the RFID system in Prada's Epicenter store
in Manhattan, it's a great way for retailers to ID customers and prevent
theft. But what happens when you bring that blouse home? Albrecht worries
that a burglar could use a reader from outside your house to preview the
contents of your closet. Likewise, industry folks say RFID tags in your
shoes could save you time in line at the bank - the teller, tipped off
by a chip reader in a floor mat, will have your account information on
her screen when you step up. But the same reader slipped under a bookstore
welcome mat could reveal your fetish for a certain type of underground
porn. These may be far-fetched scenarios, but they're also contagious,
self-propagating.
-
- Albrecht, the critic, and Ashton, the pioneer, have emerged
as leading voices in the RFID debate. They regard each other with respect.
"There's no doubt that what Kevin did with the Auto-ID Center changed
the world," she says. "He's a visionary. It's just that he's
on the wrong side of this issue."
-
- Ashton, for his part, calls Albrecht "extreme"
but admires her knack for attracting media attention. And he worries she'll
continue to strike a chord with consumers. He imagines a kind of dÈtente:
Manufacturers and retailers get the in-store benefits of RFID but devise
convenient ways to kill the tags before shoppers leave the store. "You'll
be at the supermarket, checking out, and the choices will be, Cash or charge?
Paper or plastic? Dead or alive?" Ashton says.
-
- Except that, of course, in the RFID future, you won't
actually be checking out.
-
- Shopping Cart Revolution
-
- Metro's prototype store in Rheinberg offers an early
glimpse of the supermarket of the future. You'll start by grabbing a cart
and swiping an ID card through a reader mounted on the handle. Now the
cart can announce your presence to every kiosk, display shelf, and electronic
price tag as you move through the store. The cart also will have a console
that generates a shopping list based on your purchasing habits and a map
to navigate the aisles.
-
- Dynamic Pricing Prices will be updated each night in
response to real-time fluctuations of supply and demand.
-
- Tag Anonymizer After checkout, shoppers will have the
option of anonymizing their RFID tags. The procedure can't eliminate a
tag's serial number, but it can delete any product information.
-
- Advertising Display Shoppers strolling by will be served
custom ads based on buying habits and demographic profile.
-
- Checkout Pass No more waiting in line. An RFID reader
will instantly scan all the items in your cart and debit your card accordingly.
-
- Sommelier Kiosk Oenophiles will learn about the vintage,
region, and varietal of a selection - and even get food pairing ideas by
waving the bottle at the reader.
-
- Smart Shelves Inventory data will be refreshed in real
time by readers embedded in the shelves. The information will be sent to
everyone in the supply chain: retailers, distributors, and manufacturers.
-
- Cart-Top Computing A Wi-Fi-enabled touchscreen on the
handle of each cart will read a shopper's ID card, suggest items for purchase
based on previous visits, and guide customers to the shelves where the
listed items are located.
-
- Veggie Vision A self-serve scale with built-in digicam
will identify produce by size, shape, and color, then print price labels.
Eventually, it will generate an RFID tag for each item.
-
- - Contributing editor Josh McHugh (josh@wiredmag.com)
wrote about the future of health care in Wired 12.05.
-
- © Copyright© 1993-2004 The CondÈ Nast
Publications Inc. All rights reserved. © Copyright 2004, Lycos, Inc.
All Rights Reserved. http://www.wired.com/wired/archive/12.07/shoppers.html?tw=wn_tophead_6
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