Article

RFID has future in kiosks

Early use of the technology will be at companies like Wal-Mart tracking inventory internally. But the technology will eventually turn to face customers at kiosks.

January 14, 2004

When Wal-Mart said it would employ radio frequency identification (RFID) company-wide within the next couple of years, businesses inside and outside of retail took notice. To be sure, RFID is a hot technology topic. And vendors say it may fit perfectly into many self-service strategies.

RFID tags are tiny computer chips equipped with antennas. The tags can store and transmit an electronic product code that provides a unique ID for any object in the supply chain, be it a pallet, case or individual product. Consumers may already be familiar with RFID technology from its growing use in paying road toll fees, or from buying gasoline by passing a key fob over the pump.

What's Important RFID could be a powerful tool for shoppers at kiosks. Other industries besides retail are studying the technology. The industry is still working on standards for RFID tags and readers.

For businesses, early use of the technology will be at companies like Wal-Mart tracking inventory internally. But the technology will eventually turn to face the customer in stores. Customers could use kiosks to "read" the wireless RFID tags on products within a set perimeter, even up to six feet away.

"There are several opportunities for RFID with kiosks," said Dan White, technical evangelist for RFID in NCR Corp.'s retail solutions division. "RFID enables companies to track inventory and it would allow consumers to find tagged products more easily in stores." They can also use the technology at self-checkout terminals, eliminating the need to scan bar codes. NCR is studying RFID used with its EasyPoint kiosks.

There are several obstacles to overcome though, before RFID becomes mainstream technology. First, is cost. Experts have said RFID tags can cost anyway from 15 cents to 40 cents per product, making it unlikely that stores could tag every item. Tag readers that would have to be incorporated into kiosks cost more than $1,000 today. Also, there is still a lack of standards that would allow different readers to recognize every type of tag.

As for the technology itself, there is a question of figuring out the ranges at which tags could be read. In a grocery checkout, for instance, the RFID would have to be isolated to one lane so the reader would not pick up other items in the store. Other hurdles include integration of RFID with legacy electronics, and the fact that RFID doesn't work well around metals and liquids.

Consumer groups also bring up the issue of privacy, or lack thereof, associated with linking a specific product with an individual buyer, according to Dave Donnan, a vice president at A.T. Kearney, a consulting firm that has studied RFID in the retail space.

Theoretically, if a shopper uses a credit card in a self-checkout lane and scans a product with a unique RFID tag, a clear connection is made. White said NCR is working on a "kill" function at kiosks that would allow consumers to clear the RFID information from a tag.

Setting standards

There is a consortium of companies and educational facilities working on these challenges to make sure RFID is ready for adoption. EPCglobal, formerly the Auto-ID Center, is taking the lead.

EPCglobal has a lab at Massachusetts Institute of Technology, and its members include vendors, retailers and consumer-goods manufacturers like Johnson & Johnson and Procter and Gamble.

NCR in September announced a test program designed to learn more about the potential for store checkout solutions based on radio frequency identification technology. The tests take place in a simulated store environment at MIT.

NCR also has its own Retail Technology Management Center in Atlanta that creates and tests proof-of-concept prototypes.

Retail ready

While the challenges of adopting RFID seem daunting, the potential for the technology in self-service may be great. It may just take five to 10 years to work out the kinks, experts have said. And the first outlet will be retail.

"Our idea at NCR is to use the technology first where it makes sense," said White. He said that it is unlikely that every can of peas at a store will receive RFID tags, but high-priced electronic items may be a logical choice for retailers, as well as popular consumer items.

White explained that kiosks could be placed throughout a store, and customers could use a keyboard or touchscreen to enter a desired brand or size, and the kiosk could respond with a map for locating the product, even down to its position on the rack.

He said trials are already in place using kiosks in clothing store dressing rooms to offer customers information about the articles of clothing they are trying on, simply by identifying the unique RFID tag on the items. "The kiosk could pull up ideas for accessories, information on caring for the fabric, whether the items was ever worn by a celebrity," said White.

Donnan said RFID has logical applications in tracking consumer loyalty. A shopper carrying a tagged loyalty card could walk into a store, up to a kiosk, and immediately get a personal greeting and a list of specials.

"That card could identify me as a frequent shopper, and trigger the printing of three discount coupons, for example," he said. "The key is convenience. The process takes no interaction on my part."

Eventually, customers could conduct returns using product RFID tags at kiosks. They wouldn't even need a receipt.

Jeff Roster, a Gartner Group analyst that researches the retail space, said he is amazed at the level of interest in RFID.

"Retail is fairly conservative in its adoption of technology. But retail is at the front and center of RFID adoption. It's exploding." He noted that's because Wal-Mart has taken the lead.

Wal-Mart would not comment specifically on kiosks and RFID, but Sarah Clark, a Wal-Mart spokesperson, said, "Our expectation is to have our top 100 suppliers utilizing RFID on pallets and cases of products by January 2005. It will help make sure we all have the right merchandise at the right time and at the right price to meet our customers' needs."

She listed benefits of better tracking and moving of inventory, faster receiving and shipping, improved quality inspection, fewer out-of-stock items resulting in improved shopper satisfaction, greater predictability in product demand, and overall better value for the shopper.

Smart cart

Imagine a shopping cart suggesting a bottle of wine (and its location in the store) that will go perfectly with the salmon a customer just picked up, or reminding a shopper that he hasn't bought tissues in four weeks. These are promises of the "smart shopping cart," which uses RFID.

Researchers at IBM recently showed off the technology at its Industry Solutions Lab in Hawthorne, N.Y. Other companies including NCR, Fujitsu and Hewlett-Packard are also working on similar products, sometimes in partnerships.

The smart shopping cart looks like a normal one except for an interactive screen and scanner mounted near the shopper. Once the shopper swipes his store card, shopping history is available for all kinds of purposes, from presenting a suggested shopping list to alerting him to discounts or reminding him about perishables purchased a month ago.

A shopping cart could eventually be outfitted to interact with the shelves so a shopper could see an ad or an offer about luncheon meats just as he heads into the deli section.

Making payments

Another area that has potential for RFID and kiosks is bill payment, according to Bill Allen, marketing communications manager at Texas Instruments RFID Systems division.

"Credit cards are not always a secure method of payment. They can be easily duplicated, or get scratched. RFID is virtually indestructible," he said.

Texas Instruments is involved in a kiosk trial in the Far East that lets citizens pay their utility bills via RFID card with a PIN number.

"In the payment space, all stakeholders benefit from RFID: the card issuer reduces fraud, the merchant offers faster customer throughput and sees increased spending, the consumer can conduct business more quickly," said Allen.

He used as an example a pilot with American Express, which rolled out in Phoenix this past July. Consumers in the test have a key fob with an RFID chip that they can use around town for micro payments, or smaller payments like fees at the dry cleaner, print shops or fast-food restaurants.

"With RFID, its only a matter of adoption now," said Allen.

Outside of the store

While many of the organizations involved in studying RFID are concerned with retail applications, that is not the only market segment that shows potential for RFID and kiosks. Two sports/entertainment facilities have recently announced systems that allow loyal ticketholders to bypass long concession lines using RFID tags and terminals.

One is Reliant Stadium in Houston. The other is the Seattle Seahawks stadium. Club seat ticket holders at Seattle Seahawks NFL football games can spend less time in the concession line and more time catching the action by paying for items with their Seattle Seahawks PowerPay token, featuring RFID technology from Texas Instruments.

Developed by Smart System Technologies Inc., the PowerPay system allows Seattle Seahawks fans to pay for concession items on the Club Level by simply waving a Texas Instruments RF-enabled keyfob over a PowerPay reader at a point-of-sale terminal. Payment information is transmitted wirelessly and securely.

[Editor's note: Info Touch Technologies became Tio Networks in April 2006.]