Participants also pointed to industry trends in item-level RFID (radio frequency identification) tagging, including the possibility of "item-specific" tags geared to watermelons or tinfoil, for instance.
"Were expecting more [RFID] mandates. Weve spoken with Kroger and others that have mandates on the table," Tim Short, director of sales at R4 Global Solution (R4GS), said during a Web conference co-sponsored by R4GS and Matrics.
An employee of a large product distributor said shed gotten a letter from CVS indicating that an item-level initiative is under way, even though most distributors havent been expected to move beyond carton- and palette-level tagging until the dawn of RFID Generation 2 (Gen 2).
The CVS letter came as "kind of a shock to us," said the woman, who wasnt certain whether CVS was referring only to pharmaceuticals or to HBAs (health and beauty aids), too. CVS has publicly acknowledged that its been testing RFID tagging with pharmaceuticals.
"CVS and probably Albertsons are going item-level in their pharmaceuticals," Short said. "Pharmaceuticals dont [ship] in cases, anyway."
RFID tags do exist that are small enough to fit on pharmaceutical packaging, noted Short, who cited drug counterfeiting problems as a major RFID driver for pharmaceutical companies.
Despite metals tendency to interfere with wireless RF waves, RFID can sometimes be used with packages kept on metal shelves, Short said. "It all depends on how you design the shelves," he added. "Mesh shelves can cause the worst problems because they scatter light in all directions."
Aside from metal, water is another substrate with RFID challenges. But the two substrates have different characteristics, Short said.
Eventually, tag makers might start to differentiate themselves along the lines of substrate compatibility. "We work great on watermelons! Or, Hey, we work great on tinfoil!" he illustrated.
Short said he knows of a couple of retail stores that already use tagging at the item level, including The Sheet Shop in Beverly Hills, Calif. Makers of certain high-priced items, such as DVD players, are also taking a serious look at this approach.
But item-level tagging is still rare outside the pharmaceutical area, said John Rommel, a senior account manager at Matrics.
"If you are, lets say, a TV company, then the item level is the carton level," he said. "But are people doing item-level tagging on packs of gum? No."
Some participants also conjectured that CVS might adopt a different wireless frequency range than other retailers, a situation that would raise RFID incompatibility problems.
Short said RFID carries benefits for distributors as well as for retailers. "I know [that RFID] feels kind of like a tax for doing business with Wal-Mart," he said. "But Id like to point out that [retailers] will share the benefits with suppliers ultimately."
"Thisll allow you to keep track of inventory at a more granular level. And sometime in the future, therell be the ability to do dynamic pricing on demand."
Meanwhile, retailers are already finding carton- and palette-level tagging handy for gaining visibility into backroom storage, according to Rommel. Grocers can deal with product freshness issues, for example.
RG4 President Jeff Richards said most of his companys RFID customers are product distributors. RG4 is also working with one large retailer, and it isnt CVS or Kroger.
But Richards added that by now, all of the top 25 retailers have RFID initiatives either in place or under consideration.