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  1. Analysis
March 29, 2004

RFID: Food industry panacea, or expensive spy chip?

Radio Frequency Identification, RFID, is being demanded of the food industry by international retailers. Its advocates promise easy, fast and accurate stock control, with traceability beyond your wildest dreams. However, a vocal opposition fears privacy implications and supermarket suppliers fear costs. Industry panacea, or Big Brother’s spy chip? Chris Lyddon reports.

Radio Frequency Identification, RFID, is being demanded of the food industry by international retailers. Its advocates promise easy, fast and accurate stock control, with traceability beyond your wildest dreams. However, a vocal opposition fears privacy implications and supermarket suppliers fear costs. Industry panacea, or Big Brother’s spy chip? Chris Lyddon reports.


“It is a big step forward,” Helen Duce of the Auto-ID Lab at the University of Cambridge told just-food.com. “You don’t need line of sight. You can scan pallets without getting every single packet out. It gives accuracy and reduced cost.


“RFID has been around since World War Two,” she said. “It’s used in car keys to open cars, or in the car to pay tolls.”


The Auto-ID Lab was the Auto-ID Center, set up to develop a low cost, standardised electronic product code, equivalent to the standardisation of barcodes. “Procter & Gamble and Gillette were interested in using RFID, but they were concerned about the probable cost and about standardisation,” Duce said. “We finished work in respect to standards in October and passed it on to EPCglobal.”


The idea of RFID is that instead of barcodes, which need readers, which means that someone has to look at packaging, electronic tags which can be identified from a distance can be used. The contents of a pallet can be identified, and the information stored just by pushing it through the back door of a supermarket. Shortages on supermarket shelves can be identified automatically.


Wal-Mart is leading in the US, with a call for all of the top 100 suppliers to ship tagged cases by the end of this year. There have been complaints that they are pushing costs on to suppliers. “As the volume increases, the cost will come down,” said Duce. “There’s this vision now of a five cent tag. From the supplier’s point of view it’s still quite a high cost, but the idea is that there are benefits for everybody.”


In the UK Tesco has trialled RFID, but with less pressure on suppliers, she said. “They’ve encouraged suppliers to find out what the benefits are for themselves.”


The industry was aware of consumer concerns. “The Center identified this as an issue as soon as they started. We need to build something that doesn’t raise any problems,” she said. An advisory council suggested that the tag should have a kill feature. “People should be aware of where the technology is being used. It’s invisible, so they need to be told,” Duce said. “People want a choice. Consumers are worried. It’s not so much about what we’re developing as about how it might be abused.”


There was a need for education. “People will fear things if they don’t know anything about them,” she said. “We believe they have nothing to fear.” It was also important to prevent linking of personal information to information on the products. Auto-ID Labs is offering courses under the title “EasyEPC,” for people in industry.


“Worst thing ever for privacy”


US campaigner Katherine Albrecht has become the figurehead for worldwide opposition to the cards. She founded CASPIAN, Consumers Against Supermarket Privacy Invasion and Numbering, which describes RFID as “the worst thing that ever happened to consumer privacy”.


Albrecht warned that the supermarkets face strong opposition wherever RFID is introduced, already claiming considerable success. “We chased item-level tagging out of the US. It went to England and consumers chased it out of there. Now it’s in Germany and consumers are about to chase it out of there.”


She believed that Tesco’s trial took place because the British were seen as apathetic about privacy. But there was widespread opposition, with tales of people taking razor blades off shelves and putting them back repeatedly, in an attempt to mislead reading devices. “I think Tesco were quite horrified that there is a vocal opposition.”


Tesco has trialled RFID on DVDs in two stores, Sandhurst and Leicester, as well as a trial with Gillette in Cambridge. Greg Sage of Tesco, who accompanied Albrecht on a visit to the Leicester store, told just-food.com that there had been no tagging related to food. Tesco has also trialled case-level tagging in Milton Keynes. “It ensures the maximum availability for customers and makes life much easier for the staff,” Sage said. A rollout of the case-level system is planned in April.


He acknowledged concerns over privacy. “The approach we’ve taken is to be very open and honest around our customers,” he said. “It’s the items that carry the barcodes, not the customers. From the moment a DVD leaves the shelf it isn’t read again.”


“It’s in the very early days,” he said. “The cost of the technology is still high. The stage we’re at is looking at the benefits in the trials we’re doing.”


METRO starts supply chain RFID from November


The German METRO supermarket group has announced a start to the use of RFID in its supply chain from November 2004, starting with 100 suppliers using tagged pallets and transport packaging.


Katherine Albrecht has visited METRO’s “Extra Future Store” in Rheinberg in North Rhine Westphalia, along with the German campaigning group FoeBud. “They bent over backwards to show us the policy of transparency,” she said. But one of the party signed up for a loyalty card. And someone put it by an RFID reader, set up so Albrecht could give a lecture. “One of the guys holds up a payback card and it has an RFID chip,” she said. The story culminated with a release, just as this was being written, from CASPIAN. “Scandal Forces METRO to Drop RFID Loyalty Card like Hot Wienerschnitzel,” was the headline. “METRO and its partners were blindsided by the consumer backlash,” said Katherine Albrecht.


Wal-Mart’s suppliers are so dependent on the US giant that they just have to get on with it, Albrecht said. “It’s just an additional burden on an already strained supply chain.” She put the cost of the initial rollout at US$200m.


Albrecht stressed that she didn’t want an outright ban. “I am not antagonistic to business,” she said. “I am a free market libertarian. I am very antagonistic to privacy invasion.”


Nothing to fear


Laurence Hutter, senior partner at Deloitte, and leader of its European Consumer Business practice, believes Katherine Albrecht is wrong to be concerned about the effect of RFID on privacy. “It’s based around a misunderstanding of what the technology is and does,” he told just-food.com. Case-level RFID had no effect on the consumer, and even if it were at pack level, there was nothing to fear. “If the consumer wants, the tag can be killed at the check out. I think there is unnecessary concern.”


Hutter believes that the extra food chain assurance given by RFID can make consumers safer. “There are real benefits in terms of the integration of our food supply,” he said. “I’d much rather have a high degree of assurance around the food I give to my family.”


“There’s no doubt the case for the food retailer is very strong. The case for the food manufacturer is tougher,” he said. “A lot of people say they can’t find it. They’re looking too narrowly. When you look more widely the case is there.”


One strong argument in favour from a manufacturer’s point of view was improving on shelf availability. “For manufacturers that is a big opportunity,” he said. There were also big advantages in handling costs, particularly with asset utilisation. Tagging meant more information on how pallets and re-usable packaging was being used. The beer industry had already improved the utilisation of kegs with RFID.


Explain the benefits


Dr Suzanne Lace, who works on RFID for Britain’s National Consumer Council, criticised the industry for not giving out enough information. “The industry should be learning the lessons of GM,” she said. “It’s not helpful to thrust a new technology on an unsuspecting public.” Most consumers knew nothing about RFID. “In retailing most people probably wouldn’t have any objections if it is used in the supply chain. But if it is used in stores then there are concerns about privacy,” she said. “There could be benefits to consumers, but really consumers haven’t been consulted so far. The onus is on the industry to explain the benefits.”

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