Is it time for RFID in the supermarket?

RFID technology marks store items with a tag that carries a UPC and serial number to uniquely identify and remotely trace them. Has the time come for grocery retailers to use RFID to eliminate shopper friction?

Is it time for RFID in the supermarket?

If you follow the history of invention, you’ll find two things typically happen: first, it can take a long time to develop an invention that works. Second, it can take a long time to evolve it. Just think about how the television evolved from black and white to color to 4K over the last six decades.

It’s definitely true in the retail industry that relies on innovations, from managing customer experience at the front of the store to ensuring the supply chain is delivering to the back of the store. All the while, retailers also have to manage loss due to product damage, theft, aging inventory and more. These problems have only been amplified with an onslaught of new technologies ever descending on retail operations.

Arguably, the greatest challenge the retail industry faces today is making the checkout process easy, fast and accurate. It’s also a place of heavy innovation. Merchants covet Amazon’s cashier-less retail model nearly as much as they fear it. Indeed, the notion of “frictionless” checkout has created its own cottage industry from myriad cameras mounted to capture every corner of a store, to shelf sensors that know when a product has been removed.

We’ve seen countless demonstrations of “frictionless” checkout solutions over the last few years at the National Retail Federation’s Big Show. And while each solution works in extremely controlled circumstances, not many scale to the point where they can be rolled out across a grocery chain of 500 stores without significant infrastructure expense.

Would radio frequency identification (RFID) be worth considering, too?  To answer that question, let’s remember how we got here.

 The forgotten history of self-service retail

Not that long ago, grocery stores stamped a price on a box of cereal and “rung” it up by hand-keying the price at the checkout counter. Take the Great Atlantic and Pacific Tea Company, or A&P, for example. It was one of the largest chains in the 1930s with 15,709 locations at its peak. At the time, many of those stores were “full-service”: customers asked for items at the front counter, and the store clerk would pick products from the shelf or measure a quantity of flour from a bin, tally the items and take payment. Hand-keying prices didn’t pose much of a problem, because the typical order had only a few items.

But full service would become a relic, thanks to a seed change that had taken root in 1916. Back then, an entrepreneur named Clarence Saunders introduced the concept of a self-service grocery store with the opening of his first Piggly Wiggly location in Memphis, Tennessee. Self-service, in contrast to full-service, allowed customers to roam the store freely, selecting items they wanted from a stocked shelf or stack on the floor and taking those items to a central checkout. In that way, self-service ushered in the concept of larger stores that could hold more goods.

When former Kroger employee Michael J. Cullen opened a 6,000 square foot store in New York City in August of 1930, the age of the supermarket began. To encourage shoppers to buy more items, Sylvan Goldman, who owned the Humpty Dumpty supermarket chain in Oklahoma, made a shopping cart out of a chair on wheels and a basket in the seat.

In June of 1937, the first shopping carts were introduced and the grocery industry never looked back. Bigger carts meant consumers could buy more, which led to increased assortments and larger locations. But then a new problem presented itself. Moving basketfuls of items overwhelmed the old-style, hand-keyed checkout, and the problem of long lines at checkout and the question of price entry accuracy quickly emerged.

Neither problem would be solved for another 44 years.

It wasn’t until the invention and practical use of the Universal Product Code, or UPC, that the problem of slow checkout and pricing inaccuracies found a solution. Now, checkout speed and data integrity were now at the forefront.

 UPC: A technological game changer






UPC-A Format





GS1 DataBar





RCA’s Bull’s Eye Label

Possibly one of the greatest innovations for point-of-sale was the introduction of the UPC. You know, that ubiquitous barcode that’s printed on everything from boxes of cereal to cans of soup. There are all kinds of barcode formats as well – from the common UPC-A, which is typically printed as a string of digits below a set of vertical bars, to the GS1 DataBar used on coupons and loose produce like apples and bananas. Today, you'll rarely find a product in any store that does not have a barcode on it.  It wasn’t always like that.

It might come as a surprise today, but the UPC had a rough beginning. Patented in 1952, variations of scannable codes included RCA’s “bull’s eye” label and the now-familiar strip of black bars (usually with numbers beneath). After years of experimentation and the development of specialized laser scanners, the UPC passed its first commercial test. The pivotal moment came at a Marsh Supermarket in Ohio. On June 26, 1974, a 10-pack of Wrigley’s Juicy Fruit gum was “scanned” at a cash register for the first time, and history was made. Despite this success, the UPC might have been lost in history.

The fact that a barcode could be used to purchase an item wasn’t enough to bring the UPC into widespread use. Products had to be marked (often manually), and retail systems had to be upgraded so they could scan items. What made the UPC the de facto standard today was an industry initiative to use it to solve a major business problem, the roots of which go back to 1937: slow, labor-intensive, and many times inaccurate customer checkout.

It took the vision and thought leadership of one individual to move the UPC from concept to execution. Alan Haberman is credited with ushering in the acceptance and use of the UPC. He rallied other grocery store executives and manufacturers to adopt the new coding method. In 1973, Haberman became a founder and board member of the Uniform Code Council, which later became Global Standards 1 (GS1), an organization that helps companies solve supply chain problems through the adoption and implementation of agreed-to standards.

 History repeats

What has worked so well for retailers over the past 44 years is showing signs of its age. Despite its practical nature, the UPC suffers from many flaws. UPCs don’t identify an individual item as a tag with a serial number would. The UPC on a can of beans is the same for every other can of the same size, variety and manufacturer. And it doesn’t help with inventory. Retailers have to count each can on the shelf to determine actual on-hand quantities.

There’s another problem with the UPC. To use them, every item must be visually scanned by something that can see the UPC. So, if someone pockets a pack of chewing gum and walks out of the store unnoticed, the retailer has no idea it’s gone.

Lately, there has been a lot of talk about frictionless checkout using advanced technologies to keep that pack of chewing gum from walking out unpaid. True frictionless checkout allows the patron to bag groceries while walking the aisles, leave the store and have their account automatically charged without any fuss. Theoretically, someone would not be able to pocket a pack of chewing gum without being charged on the way out of the store.

It's the notion of the Amazon cashier-less model. But the monumental cost of infrastructure and integrating complex technology to achieve that just isn’t practical today. Consider the cost of rolling out that technology to a chain of 400 (or more) 75,000 square foot supermarket locations.  If it were practical, it would have been done by now.

Eventually that technology will evolve, and the costs will come down, and learnings from its use will inform future adoption. But what do we do today if waiting years isn’t the answer? Retailers need a bridge: a solution that will carry them forward yet be compatible with future technologies.

 RFID: A real bridge ahead

In 1983, Charles Walton patented a technology called radio-frequency identification (RFID). Over the last 38 years, RFID has evolved significantly and is regularly used in supply chain management and many other applications. In a nutshell, RFID provides a way to mark individual items with a tag that carries a UPC and a serial number that identifies each item uniquely. And, it provides a way to read that tag remotely. This allows retailers to trace and track items throughout the supply chain. But the technology is more complicated than simply scanning a UPC.

So, how does RFID work? To keep this simple, we’ll focus on passive RFID, which is better suited for retail, because passive RFID is powered externally rather than relying on an internal power source. The components used with RFID are a transmitter and a receiver. They work much like a radio station, which broadcasts a signal, and a radio that receives the broadcast signal.  

Today’s RFID consists of a small radio and antenna hidden in a price tag or embedded in a package. That radio doesn’t have its own power source, but when a special radio frequency pulse is broadcast, the radio uses the signal to power itself. Once powered, the radio transmits data about itself. The device that initiated the radio frequency pulse receives the transmission and sends the data to a computer for processing. That data is called an electronic product code, or EPC, containing the UPC and serial number.

Sounds easy, right? Well, mostly. RFID has suffered from problems that have been largely overcome in later generations of the technology. For example, an RFID tag affixed to a can of peas may not always hear that radio frequency pulse, because the metal interferes with the antenna on the tag. Other examples include RFID tags on dense items such as packages of fresh meat and bottles of liquid because dense objects can block radio frequencies. Also, RFID tags on items piled into a metal shopping cart are obscured by the metal cage of the cart itself.

These problems have been largely solved by better RFID tags, multi-dimensional antennas, ultra-high frequency radio waves and other technologies that allow reading RFID tags in nearly any orientation. And to solve the shopping cart problem: replace it with a plastic one.

 Technology, standards and tags






Example RFID Tag

Now that you’ve learned a bit about RFID and its use in tags, there’s more to understand about the technology. Early in its development, RFID gained a reputation for being costly to implement and somewhat unreliable, as we outlined above. Both arguments were also true during the development of the UPC.

Early generation RFID required bulky rolls of costly tags that had to be affixed to each item manually. The tags had to be updated one at a time, and the process was slow. Contrast that with modern passive RFID tags that come can come in read-only versions. Read-only tags can be made in bulk and can cost as little as a penny per tag (perhaps less depending on volume). And, read-only tags can’t be modified after production. That’s important because traditional RFID tags can be changed with something as simple as a smartphone.

Remember that standards organization Alan Haberman started? Thanks to him, the use of RFID technology is standardized through the GS1. That EPC—Electronic Product Code—we discussed earlier provides item-level identification. The serialized global trade identification (SGTIN) provides for legacy UPC/EAN data along with a serial number that can be used to determine duplicate reads (among other uses).

 Practical application and industry involvement

The best option to use for the high-speed packaging requirements of the consumer packaged goods (CPG) industry is the read-only RFID tag. These tags can be ordered, or, for larger CPGs, they can be created onsite with special equipment, prior to production runs to align with manufacturing.

Let’s take Procter & Gamble, producers of Tide detergent as an example. P&G could affix an RFID to every bottle of Tide they make, not unlike other CPGs do with electronic article surveillance (EAS) tags today. While there would be start-up costs, the incremental cost would be relatively low. And, over time, the RFID tags and the affixing process could be driven down by volume to the point that the cost of the tag and the process of affixing it would approach a penny per item, or less.

 Where do we go from here?

According to research in 2018, 69 percent of retailers cite a significant level of RFID adoption, and some retailers have been experimenting with RFID on the sales floor. And, there have been recent RFID trials for limited assortment applications like convenience stores proving the technology is viable.

Although RFID is used across the entire supply chain for many products today, individual item tagging is not widespread. But we’re on the cusp of a revolution. New advances in silver nanoparticle ink allow the RFID antennas to be printed through an inkjet printing process, making the cost of the tags extremely low while not compromising quality. Other advances continue to drive the per-tag price down.

So, what’s missing?

Perhaps what’s missing is a modern-day Alan Haberman? We need a visionary—a thought leader who can champion the world’s largest retailers and CPGs as Alan did in the 1970s. While not a simple task, both retailers and CPGs would derive long-term benefits.

Think of just one of the benefits: Retailers like Walmart, Target and Kroger would be able to inventory entire stores electronically in a matter of minutes. They’d get exact on-hand quantities without cycle counts and other methods of labor-intensive inventory counting—which can take days and hours to complete with still-questionable results.

From a food safety standpoint, retailers would be able to track and trace RFID-tagged product recalls to the doorstep of the buyer. Just in 2019 alone, there were 124 recalls involving over 20 million pounds of meat. With RFID-tagged product, every package, with a unique serial number, would be linked between origin and the receipt on which it was printed. Retailers using their loyalty systems would be able to notify the exact customer of the recalled product—and they’d be able to do it quickly.

On one hand, it would save CPGs and retailers from having to discard otherwise good product. And, on the other hand, it could save lives. Let’s not forget there’s also that little problem of making the checkout experience fast, frictionless and accurate. Well, that problem can just go away with RFID.

So, after all the obvious benefits of RFID, what’s next? Calling the next Alan Haberman: where are you, and have you heard of RFID?