Big Brands Test ‘Intelligent’ Product Packs

30 January 2003

By the time the next November/December holiday season is upon us, a wide range of consumer products will be on sale in packs enhanced by minute computer chips called RFID (Radio Frequency Identification) tags.

The tags will carry customizable, scanner-readable data such as product serial numbers or stock codes, enabling retailers and manufacturers to know immediately and precisely what’s moving and where.

According to analyst Michael Liard of research firm Venture Development, the tags offer a win/win scenario to all concerned. They will dramatically improve inventory operations, thus reducing costs and [if retailers are feeling atypically generous] reduce consumer prices.

Among the big names currently testing RFID are …

Gillette, which plans over the next several weeks to attach chips to packages of razors sold in a Massachusetts-sited Wal-Mart store plus several British supermarkets [probably Wal-Mart unit Asda]. Chip scanners on the shelves will track uptake and alert store managers once shelf stock falls below a preset level.

Procter & Gamble too has recently tested the chips on bottles of Pantene shampoo and Bounty towels to help track warehouse inventory and reduce lost merchandise. It also plans to tag certain unspecified products in an Oklahoma Wal-Mart outlet.

• Luxury fashion chain Prada has tagged clothing in a New York store since December 2001. As customers shop (and before they even reach payment points) scanner-equipped sales staff can tell what other colors and sizes a garment comes in, and if there are similar styles in stock. Prada prudently removes the tags before items leave the store.

And this is only the start. In February the Massachusetts Institute of Technology's Auto-ID Research Center, the brains behind the chip technology, will announce a major RFID project in partnership with such marketing bluechips as Johnson & Johnson, Coca-Cola, PepsiCo, Home Depot and Target.

Although RFID is not a new concept – it has been in use since the 1940s – the chips were too costly to use on individual product packs. But, says RFID Journal editor Mark Roberti, they can now be mass-produced for as little as 15 cents (€0.14; £0.09) apiece.

Data sourced from: USA Today; additional content by WARC staff