Imagine a food shopper pushing her cart through the supermarket and as she enters the cereal aisle, viewing an instant coupon for a particular brand. Deciding to act on the promotion, she picks up the box of cereal and puts it in her cart. A screen on the cart then reminds her to buy milk. What the customer likely doesn’t know is that the cereal box contains a tiny computer chip, which dutifully recorded her selection and triggered the on-screen message. The little chip also allows her to check out and pay without dealing with a cashier, alerts the grocer to impending stockouts and informs the manufacturer of the minute-by-minute success of its ongoing cereal promotion.
That glimpse of the future using RFID technology (radio frequency identification) is still a few years away, but it’s coming faster than you might imagine. While RFID was initially touted as a way for retailers and distributors to save money in areas like inventory management and staffing, it’s also giving marketers a new tool in their in-store advertising arsenal.
BTV+, a Toronto-area digital signage equipment producer has “no less than a dozen projects at the planning stage for RFID triggering at the point of purchase display,” said Lyle Bunn, a BTV+ executive. Bunn wouldn’t divulge the marketers involved but said they range from athletic equipment makers to tourism and financial companies. One program for a golf equipment maker involves tagging specific clubs so that if a shopper picks up a particular club, the unique benefits of that piece of equipment will be shown on a display monitor.
Meanwhile, RFID-embedded shopping carts were tracked last year at a U.S. supermarket as part of a Wharton study. It found that grocery shoppers, rather than weaving up and down aisles, stay on the periphery of aisles and tend to travel through select aisles. The insights have implications for the placement of advertised products and the use of endcap displays, the study’s authors stated.
Until now, of course, RFID has been driven by retailers looking for cost savings. “Wal-Mart is one of the biggest (proponents) of this,” said Jeff Ashcroft, an RFID expert with PricewaterhouseCoopers. Wal-Mart Canada recently began an RFID pilot project with 16 suppliers in an effort to improve its out-of-stock status in stores. In two U.S. studies conducted on Wal-Mart’s use of RFID inventory tracking this year, stockouts were reduced by 16% and 62% respectively, he said.
RFID could also result in major savings for packaged goods manufacturers. Rather than relying on an army of sales representatives to track whether a particular sales promotion has been implemented at the store level, RFID systems could signal whether it’s running as planned and give updates on its success.
Most of the RFID point-of-purchase will show up first in the U.S. as soon as this fall, but in Canada retailers are now testing the benefits. The Canadian RFID Centre, an industry supported testing organization, began a six-month pilot program in July. The first such RFID project will explore the use of RFID tags on some perishable and non-perishable products sold by Loblaw Cos. coming from four suppliers: Maple Leaf Foods, General Mills Canada, Scott Paper and Unilever.
But marketers have been slow to capitalize on RFID’s potential to track and influence consumers because of potential privacy concerns. But PWC’s Ashcroft says those concerns are overblown.
