What's an RFID tag and why should I care?
Radio Frequency Identification (RFID) is the combination of a tag on an item, and an "interrogator" at some known location. The interrogator sends out radio waves every few seconds. If an item with a tag gets close, the tag bounces back the radio waves, and twists them a bit to say, "Here I am and what I am." It's better than a bar code because you don't have to be able to see it. It identifies, not a class of things, like bar codes do, but individual things. This particular package of steaks. This particular shirt or pair of size 9 shoes. At a dime a tag, it's cheap enough to put on lots of things. And the result is a sort of "search engine for things." If it carries a tag, you can know where it is, instantly -- even inside a pallet of mixed goods.
As the world shifts from blind, brand mass marketing to focused, intelligent relationship marketing, RFID tags can be hugely powerful tools, transforming the customer relationship. They can wield their power without invading the privacy of the individual, which most everyone concedes is critical to relationship marketing today. Look at a couple of examples.
MediaCart, in test right now in New England, is a supermarket cart with a computerized shopping assistant. Speak the name of a product and MediaCart shows you where to find it. It can arrange your shopping list in aisle-by-aisle order, and remind you when you walk past something you want. It can check a product for fat grams or food allergies, track how much you've spent so far, and give you an instant, side-by-side comparison of competitive products. Best of all, it can check out your purchases as you put them in the cart, so the final check out at the front end takes only a few seconds, whether you bought a dozen things or a hundred.
But MediaCart works just as hard for the marketer as it does for the shopper. Seventy percent of buying decisions happen at the point of sale. Brand marketers, trying to get closer to the decision point have, wherever possible, replaced conventional advertising with "proximity marketing," right where the action is. MediaCart can show you a seven-second commercial, just before you get to that product on the shelf. It can throw in a coupon. And here's the one-to-one bonus: It can direct that coupon-and-commercial only to people whose previous purchases show that they are good prospects for this particular product. Why should I put the same things on sale for everybody? Everybody doesn't want the same things.
A company can deliver an individualized message without invading the customer's privacy. If, for example, a customer is a regular buyer of high-priced premium cat food, give them a premium cat food coupon based on data from a loyalty card. But the store won't know, and the brand won't know, and MediaCart won't know who that customer is. All they will know is that the offer went to a cart being pushed by someone who buys in this category. Right now MediaCart works with a barcode reader. But it's RFID-ready, as soon as enough shelf locations or products or digital signs are tagged. It's relationship retailing made automatic, tailoring offers to customers in-store, in real time.
Here's another new power. Those RFID tags can carry tiny sensors that let the interrogator know about the condition of a product: temperature, impact (don't put that one on the shelf; it was dropped 10 feet in shipping.), and measures of freshness. There's a new tag in development that can sense half a dozen different kinds of bacteria and blow the whistle on a product gone bad. Maybe it ought to be in your milk bottle, or peanut butter jar.
How about solving this nightmare? Imagine a business in which every item you sell comes in four styles and two colors and seven waist sizes and eight leg sizes and the customer for one of this set of nearly identical items is not a prospect for any other item in the set. Imagine that customers come in every day and move the items around in unpredictable ways. Imagine that each of these items has a full-price lifespan of only about 30 days. Then imagine that, of all the people who are lured into your store by its expensive location, expert marketing and reduced prices, 60 percent to 70 percent go away without finding what they were looking for. That's apparel retailing in the U.S. How do any of them survive?
Customers pick up stuff in one place and put it down someplace else, and it's gone -- unsellable until someone else finds it and puts it back. Customers take a too-small size into the changing room, and that results, more often than not, in a lost sale.
There's a reader in the changing room mirror. It can look at the too-small slacks, tell you if the next size up in that color is on the sales floor, and summon an associate to bring it to you. Sale saved. The mirror can also show you photo images of add-on products that would go with the one you're trying on. If the customer has a loyalty card and wants to opt-in for more information, it could show things that go with the stuff she bought last month. That's one-to-one.
RFID chases these clouds away. Tags permit instant inventory: Walk down the aisle with a reader and see exactly what sizes and colors are missing. Walk into the backroom and find it at once. Bar code inventory is arduous and slow. You have to carry a reader to every shirt and tie and sock, hour-by-hour. Employees put it off. Employees cheat. But RFID is easy. And in pilot tests of RFID apparel tags, you get an instant reduction of out-of-stocks by 30 percent or more.
Better customer experience, better results for the retailer. That's a win-win.
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Mickey Brazeal is a professor of marketing communications at Roosevelt University and author of RFID: Improving the Customer Experience.