Future Store keeps RFID except in loyalty cards

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By: Wise Marketer Staff |

Posted on March 8, 2004

The German retailer, Metro Group, has abandoned the RFID tags in its Future Store's loyalty cards, following consumer concerns over personal privacy issues. The company has now issued a 'position statement' explaining that RFID will continue as planned, with the exception of its now bar-coded loyalty card.

According to media reports, Metro is the latest in a series of companies to adjust its RFID implementation strategy after consumer action groups - such as Caspian (consumers against supermarket privacy invasion and numbering) - made their opinions known as widely as possible.

Need to educate
The US-based Caspian organisation is hard set against the use of any technology or system that is capable of tracking consumers, their purchases, or their behaviour. In Germany, its counterparts, FoeBud and FITUG, are also worried that RFID technology will become too invasive, and open up privacy and security issues where consumers find themselves being 'scanned' unknowingly.

But while such fears of 'big brother watching you' are perhaps inspired by science fiction movies, and founded more on misunderstanding than fact, it could be argued that consumers are simply reaffirming the need for education about the technology from those companies that plan to use it - before it is introduced.

RFID presses ahead
Metro had embedded RFID tags in its loyalty cards to help identify the customer in order to verify their age, to aid compliance with movie-viewing age limits when customers view DVD movie trailers. But Metro has decided instead to opt for bar-coded loyalty cards instead of RFID-chipped cards to avoid the controversy.

However, the rest of Metro's RFID implementation (throughout its extended supply chain, for example) is to remain unaffected, and the firm's top 100 suppliers are still required to attach RFID tags to pallets and cases by November 2004, as previously planned.

Metro's official position
Since April 2003, Metro has been testing new retailing technologies in its Future Store in Rheinberg (near Duisburg), Germany, in cooperation with the partners of its Future Store Initiative. Its aim is technological innovation to benefit both the customer and the retailer. One of the technologies tested is RFID, which is mainly used in the supply chain and in the warehouse.

In the store itself, RFID labels have been tested on three products (Philadelphia cream cheese, Pantene shampoo, and Mach 3 Turbo razor blades). Moreover, RFID labels are also being used for theft prevention for the firm's stock of DVDs, videos and CDs.

No item-unique tracking
The tags being used by Metro store a number that is comparable to the EAN number used on conventional bar-codes, providing the manufacturer and retailer with product information such as the best-before date, price, and weight of an item. This numerical code (the Electronic Product Code or EPC) is read by an RFID reader at a distance of up to one metre. The reader then matches the EPC code to Metro's merchandise management system. While the tag does contain a unique serial number, that information is in no way linked to the product at any level in Metro's implementation, meaning that items cannot be tracked individually.

No personal data tie-ins
Once outside of the store, the tag loses its function for Metro, as it is not connected to the merchandising database any longer. The RFID tag is not used to link product data with personal customer data within the Metro Future Store Initiative at any time.

How RFID is now being used
At present, the Metro is testing the use of RFID technology for the Future Store primarily in logistics and warehouse management. All in all, RFID is employed in the following areas:

  • The logistics chain: RFID tags help to check that goods arriving from suppliers match the actual order placed.
  • Warehouse management: The goods flow system uses RFID tags at pallet level to accurately register the goods in the warehouse.
  • Transport of goods to the sales floor: Thanks to RFID, the goods flow system can identify which products have been moved into the store's sales space.
  • On individual products: Some products in the Future Store are already using RFID tags, for use with Metro's Intelligent Shelf initiative. There are reading devices in the shelves for those products, which simply notify Future Store employees when the shelves need to be restocked.
  • On CDs, DVDs and videos: Until now, the RFID system made it possible to view trailers for individual films and listen to music CDs in-store. However, following the withdrawal of RFID in the Future Store loyalty card, this will be achieved via bar-codes instead. However, the RFID labels in the multimedia area do still help in theft prevention, and have a function similar to that of conventional EAS alarm devices.
  • RFID in customer loyalty cards: Up until now, RFID was included in the Extra Future Card loyalty card for the sole purpose of the release of age-appropriate multimedia articles, in compliance with the law for protection of children and young people.

The RFID chip in the Future Store's customer card did not have any other function - only the customer number, which is also printed on the card, is stored on the chip. The customer number stored in the RFID chip of the card is not read at any other place in the store; not even at the multimedia terminal. This also holds true for the RFID readers at the store entrance and exit which are solely for theft prevention (and therefore have to try to read RFID tags on certain relevant products).

Dealing a new hand
In order to counter any suspicion or concerns with regard to RFID chips, the Future Store Initiative has resolved not to use these chips any longer in the Extra Future Cards. Customer cards already issued will be exchanged for conventional cards without chips in the course of the coming weeks. Irrespective of the confirmation of the legality of the chips, Metro's position statement makes it clear that this move aims purely to dispel any doubts, even if they are chiefly of an emotional origin.

Customers given deactivator
An RFID "deactivator" is also available to customers at the exit of the store, overwriting the numerical product code stored on the chip and changing it into a useless series of zeroes. To this end, the customer places their purchases on a surface with an integrated RFID reader. The tags are read automatically, and the numerical code stored is shown on the display. With the push of a button, the customer deactivates the data.

The manufacturer serial number on the chip, however, can't be deactivated at the moment, but Metro makes the assurance that this number is never stored in connection with either product, transaction, or customer data. Having said that, overwriting even the chip manufacturer's serial number will be made possible by a forthcoming generation of chips which is currently under development. In the Future Store, Metro says that this function will probably be offered to the customers from mid-2004.

Promoting RFID discussion
The Metro Group wants to help institute long-term reliance on RFID technology and define worldwide standards for RFID, in much the same way that the commonly accepted bar-code was established decades ago. Therefore, Metro is cooperating on an international level with other companies from the IT and consumer goods industries, as well as other retail companies, in the EPCglobal initiative. In this context, Metro is actively involved in the formation of a separate working group that will deal with questions concerning data protection in the use of RFID technology.

Finally, Metro promises that:

  • Wherever RFID is used throughout the store, it is clearly indicated.
  • Only product data, and not customer data, is stored on the RFID chips used in products.
  • The RFID labels cannot be used by Metro outside of the Extra Future Store.
  • Comprehensive explanations of RFID technologies are provided for customers in information leaflets and through in-store Info Terminals.

Metro Group's official position statement can be found on its web site - click here.

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