The Impact of RFID on retailers.

Radio Frequency Identification (RFID) technology has been in use since the 1940’s by the US military to distinguish friendly aircraft from enemy aircrafts (Mayfield 2002)

It has been in commercial use since the early 1980’s (Jones et al 2004)

Radio frequency identification (RFID) technology is the generic name to technologies that uses radio waves to identify items ( Jones et al 2004) It is a small tag containing integrated circuit chip and an antenna and has the ability to respond to radio waves transmitted from the radio in order to send, process and store information (wu et al 2005)

The RDID technology consists of three basic components a tag a reader and a computer (wu et al 2005) The tag contains unique identification of the product to which it is attached to, the reader emits and receives radio waves to read the information that is stored in the tag and the computer processes all the data that is collected (Attaran 2007, Wu et al 2005).

There are three types of radio frequency tags, high frequency (850-950MHz and 2.4-5GHz) medium frequency (10-15MHz) Low frequency (100-500KHz) Low frequency tags are used for applications such as security access and asset management which requires short rate range. High frequency tags are for applications that require longer rate range and they transmit faster and can be read further away. However they consume to much power and far more expensive than the low frequency tags (Mayfield 2002)

RFID within retailing

Barcodes have been quite dominant in the retail business for more than 25 years. Using barcodes products will have to be manually scanned and read individually. The bar codes have to be seen to be scanned and if the barcode is damaged or tampered with it is impossible to read. The information in a barcode is very limited.

Unlike bar codes radio frequency technology tags do not have to be seen to be read by the reader. Again the RFID technology can read a whole cage or trolley of products at the same time (Mayfield 2002) This has been reiterated by Hingley (2007) (cited in Atkinson and Hutto 2004) stating that the main advantage of RFID over barcode is the ability to identify multiple items at once. According to Hingley (2007) cited McLeod 2004 pg35) the use of RFID would reduce human involvement in the supply chain. The ability to track inventory inside and outside of the store is also an advantage as it reduces staff theft and shop lifting (Hingley 2007)

Introduction of RFID in the retail industry have so many implications, however it will eventually replace barcodes in about 15 years according to a German retail giant Metro AG (Blau 2004) For RFID to be a viable alternative to barcodes the unit cost of a RFID tag will need to drop to €0.01 (Blau 2004)

RFID technology has been experimented by most of the UK and the USA’s main retailers for example in June 2003 Wal- mart instructed its top 100 suppliers to use RFID technology through out their supply chain. In the UK the major grocery stores like Asda, Tesco’s, Marks and Spencer’s and Sainsbury’s have also been experimenting with the technology for example see (Karkkainen 2003)

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The introduction of RFID will have many advantages compared to barcodes, for example barcodes read only the tag of the product, where as RFID reads the product itself (Pritchard 2006) With all the benefits of the technology the barcodes are likely to remain a dominant force where large volumes of  lower price goods are purchased (Hingley 2006) Hingley (2007) (cited in IGD 2004) identified that while the RFID may have many advantages compared to barcodes, barcodes still have three main strengths, the cost, the reliability and established technology. It is important to note that when barcodes were first introduced ...

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