European-based retailer the Metro Group has beaten U.S. giant Wal-Mart out of the RFID starting gates. Collaborating with IBM and other IT vendors, the Metro Group this month became the first retailer in the world to bring RFID out of trial mode and into commercial deployment. Metro also runs an RFID-enabled “Future Store,” but its initial commercial RFID implementation is closely geared to the back-end supply chain.
“The RFID rollout of the Metro Group, beginning in November 2004, is much more than a trial. It is definitely a commercial rollout,” Katrin Sulzmann, a Metro spokesperson, said in an interview with eWEEK.com.
Metro is the first large retailer to use RFID (radio frequency identification) wireless technology “throughout the logistical supply chain,” according to Sulzmann.
Initially, the rollout involves about 20 product suppliers—including a bunch that are global household names—along with warehouses and stores in three Metro divisions: Metro Cash & Carry, Real, and Galeria Kaufhof.
Some of the suppliers joining in on Metros deployment are also participants in RFID trials being run in the United States by Wal-Mart and Albertsons, Robert Mayberry, vice president of IBMs new Sensor and Actuation Division, said in another interview.
Those two U.S. retailers have set Jan. 1, 2005, as the deadline for conforming with their respective RFID mandates. Target Corp., another major competitor in the United States, is eyeing June 1, 2005, for RFID compliance.
But Metro last week met a self-imposed deadline of November 2004 for commercial RFID rollout, when its product suppliers began shipping RFID on warehouse pallets. Metros first crop of suppliers includes Unilever, Nestle, Procter & Gamble, Gillette, Johnson & Johnson, Kraft Foods and Esprit, for instance.
Essentially, Metro will initially hone in on using RFID to automate warehouse, shipping and inventory management, Sulzmann said.
At the next phase, cartons and shipments of hanging merchandise also will be outfitted with RFID tags, or what Metro is calling “Smart Chips.”
“First and foremost, the Metro Group is going to employ the RFID technology in the supply chain. The entire restocking process in the warehouses, stores and outlets of the Metro Group can be controlled by means of RFID,” Sulzmann said.
IBMs RFID Middleware
Metro sees advantages in RFID in terms of costs, planning and efficiency, she said. “The use of this innovative technology leads to extensive process optimization, to higher effectiveness and thus to lower costs.”
“For one thing, it allows for better surveillance of the process chain. With RFID technology, transport and location of goods can be exactly traced from the manufacturer down to the store shelves. For another, the individual sections of the process chain can be better coordinated. Production and inventory can be planned more accurately and are easier to control.”
The cost savings are particularly clear in fresh food management, she said, pointing to a study conducted by IBM Business Consulting Services and the Auto-ID Center of Cambridge, Mass.
Metro has hired IBM, an IT product and services partner for the past 30 years, to provide middleware as well as installation services for the RFID rollout. “We wanted a partner with experience in [both] RFID and retail,” she said.
IBMs RFID middleware is being put to work for exchanging data between RFID readers and Metros merchandise management system, as well as for administering the RFID infrastructure.
Meanwhile, at its “Future Store” in Rheinberg, Germany, Metro is trying out RFID-enabled retail goodies such as the Personal Shopping Assistant, a handheld computer with a touch screen that is attached to a shopping cart. Customers can use the PDA to scan and price individual items, gain additional product information and pinpoint the locations of items in the store.
Also being trialed there are Smart Shelves, equipped with RFID reading devices meant to detect if an item is out of stock, or if a wrong item was placed on the shelf, Sulzmann said.
At the German Retail Convention last month, Metro demoed a few additional retail innovations from its Future Store Initiative. With the De-Activator, for instance, shoppers have the option of de-activating the RFID tags on the goods theyve purchased, after first going through a self-checkout system known as Future Check-Out.
Major members of Metros Future Store Initiative include Intel, SAP and Microsoft, for example, plus IBM.
In 2006, Metros commercial RFID rollout is widely expected to grow to about 300 suppliers, along with additional Metro warehouses and stores in Germany.