RFID has certainly had more than its fair share of hype. Can it really make a genuine impact on business today?

JS: We already deploy 3.5 million tags and that's giving us business benefits. We are trialling item-level tagging. We can't yet talk about the results but I feel passionately that this will deliver the extra efficiencies that our supply chain is looking for. Tesco and M&S both have efficient supply chains in a very competitive business, and if we can make up extra percentages in the supply chain, it's a business benefit.

It's very simple: just make sure that the benefits are greater than the costs. Don't try to do it where there are no benefits. It's the same with any new technology introduction: start with the business case and find the technology that fits. Of course this is step-change innovation and it's disruptive, and there may be people in the organisation that will resist change. That's why it's not just about the technology, it's about changing the way your business works.

But aren't you going to have to drag some suppliers in kicking and screaming?

CC: I worked for 11 and a half years at Mars, so I do understand the supplier's side. But in my personal view, if they look they will find where they can get benefits. They need to start looking.

But the retail giants are not really giving them much of a choice, if they want to keep contracts.

JS: We want to work with our suppliers. And they've seen benefits in their own businesses that we didn't anticipate. M&S is lucky in that we have an own-brand business so don't have to deal with the complexities that Tesco does, but nevertheless our suppliers are very vocal and very active about those things that they think are worth doing or not worth doing. They are very quick to tell us if we are going in the wrong direction.

Are manufacturers really getting as enthused as retailers like yourselves?

CC: It depends on the manufacturer. If you talk to Gillette, you see huge levels of enthusiasm because they have been at the forefront of RFID. It's also the case that between slightly different product segments there are quite big differences in attitude. If you get into healthcare, then the cost of product recalls, for example, are absolutely enormous. With RFID, you can be more rapier-like, taking out just specific pallets. It varies by manufacturer, just as it varies by retailer.

JS: The idea that Wal-Mart or other retailers are really going to impose a lot of costs into the supply chain in a very competitive industry, without a genuine belief that the benefits are going to be there, is crazy.

We believe the benefits will pay for the costs of the technology. The cost of manufacturing and the cost of packaging eventually reflects back into the price of the finished goods. Our customers simply don't want to pay for technology.

Accepting your view of the ideal relationship between retailer and supplier, there still has to be a critical mass of suppliers in the chain before RFID delivers benefits. Are we anywhere near that stage?

CC: You need to have critical mass to get all the benefits, but you can get significant benefits now. But you will only get the benefits if you focus on what those benefits really are.

JS: We're doing it on returnable trade, which means that benefits pay back on the many trips the trader makes over the years. At this stage in clothing we think the best benefits will come where goods are fairly expensive, where they are size complex ð like the 40 different variations on a man's suit ð and where you have relatively high volumes.

So we pick the best of the things that today give us the business case. As the price of the technology comes down you begin to get payback on the goods that are less size-complex and of lower value. This is not a big bang, it's a rollout.

But the logic is that in the long run everyone who wants to trade is going to have use RFID, whether they like it or not. Are there any advantages in being an early adopter?

CC: How many people don't use barcodes? At the start it was just innovators but it gradually grew. Exactly the same thing will happen to this technology, only faster. Eventually everyone will be using it, absolutely. Either you do it now and take advantage of the benefits faster. You can start later but you will just have to catch up with the things we are doing today.

JS: The real question is whether it is a feasible strategy to be a fast follower in such a fast-moving industry. I would say no, because you will just be the first of the losers.

But are there not dangers in starting today when we haven't even yet settled on clear global standards?

CC: The reason the standards issue will not be such a problem this time is that it has the backing of very many large organisations such as Wal-Mart and Tesco, and on the manufacturers side the likes of P&G and Unilever. So there's huge backing for making this single standard work. We will have a single tag that can be read anywhere in the world.

JS: Another advantage of being in early is that we have tackled this. If you are only just starting now it won't affect you because you'll have two years of catching up to do anyway. By the time you have worked out your business case and tested it and are ready to spend real money, you will find the standards will be there. I wouldn't wait for standards.

The other big issue yet to be resolved is privacy.

JS: I think there are concerns generally about privacy, like CCTV. But we need to make sure this exciting new technology doesn't become the lightning conductor for everyone else's privacy issues. It is something we have to listen to very hard and act very responsibly.

The fact is that we aren't doing anything at all to get people even thinking we are associating customer data with RFID data. We're keeping it very much apart. At the moment we see this as a supply chain technology. We can achieve very substantial business benefits without going near areas that are sensitive.

There's a big difference between now and the future when this technology is all pervasive and in the hands of potentially less responsible businesses.

CC: There was once a feeling that customers wouldn't accept CCTV. But people realised that it was for their benefit ð if we could stop people stealing it meant we could offer lower prices. So I'm interested in what customers really think about privacy, not what a few people think customers will think. The tag we use is passive, it can't do anything on its own. All there is on the tag is a number.

JS: All people such as Tesco and Marks and Spencer can do is to lead good standards of behaviour.

One thing that is certain about the future, though, is that it will produce more and more data that will need to be managed.

JS: Yes, but there can be a big gain here. The way we have approached it is that nobody needs more data, what they need is better management of information. The trick is to minimise the amount of data you collect. There will be demands on your infrastructure but it's not going to be the enormous pill to swallow that everybody says. There are products and systems around to effectively manage information. It's not rocket science.

CC: The main thing is to remember that this is a business issue, not an IT issue.