Tesco readies itself for extension of RFID trials

Supermarket giant Tesco believes radio frequency identification (RFID) will be the most important technology impacting the retail sector in the foreseeable future.

'We think it's the next big thing,' said IT director Colin Cobain. 'From our trials, we know that the technology works and that the benefits are there.'

Cobain says a new trial of RFID, which will involve the tagging of cases from suppliers to Tesco's distribution centres, will launch late this month, with further trials to follow.

The retailer has been testing RFID for some time, with two high-profile trials in separate stores tagging Gillette razor blades and DVDs, which Cobain says has proven the case for the technology.

'The benefits are there right now for retailers, if they intelligently add things to their processes,' he said.

In November, the retail giant unveiled its plans for rolling out the technology through its supply chain by 2008.

Cobain advises retailers thinking about the technology to focus on the relevant applications and processes, rather than the tags and readers - and says that issues like standards and intellectual property disputes still present some obstacles.

But cost has become less of a problem. 'The price is okay right now, because it serves our business case,' he said.

Speaking at the Retail Systems Alert Leadership Forum conference in London last week, Cobain also highlighted the problem of customer perception and privacy concerns surrounding the tags. The company has adopted the term 'radio barcodes' to make the technology seem more acceptable.

'We're trying to make it simpler for customers to understand.'

Tesco is also buying convenience store group Adminstore, and plans to include its local shops in future RFID trials.

Convenience stores Europa, Harts and Cullens will migrate over to Tesco's standard IT infrastructure on completion of the £53.7m acquisition.

The 45 London stores will be rebranded to Tesco Express, with electronic point of sale, software and supply chain systems converting to Tesco's IT standards.

'Where we're trialling RFID already, the same will apply to the new stores,' said a Tesco spokesman.

'However, much of the goods in Cullens and Harts are low cost and unlikely to be tagged,' he said.

By standardising IT infrastructure in the new stores, Tesco hopes to make cost savings in IT and supply chain management, as well as improve stock delivery systems.

The new stores are likely to adopt Tesco's Microsoft .Net-based architecture, which the supermarket adopted in February 2002 to speed the deployment of new business applications over the web to its 506 stores and offices.

The company's preferred merchandising, supply chain, logistics and in-store software from G-Log, Retek and Siemens are also likely to be adopted.