Ignorance putting RFID rollouts at risk

Enterprise radio frequency ID rollouts run the risk of expensive failure because a substantial number of RFID technology firms do not understand retail, while many retailers do not understand how the wireless networking technology can benefit them.

According to a study released today by ABI Research, this "disconnection" between RFID manufacturers and retailers is slowing down market adoption.

"There is no cookie-cutter approach to RFID," said ABI research analyst Sara Shah.

The report noted that many retailers turn to their usual consulting companies, often one of the largest half-dozen. But big consultants are rarely early adopters of new technologies, and are often content to let ideas mature before getting involved.

"Wal-Mart's approach is creative. It's very worthwhile for them, which is why they're pushing forward on schedule," explained Shah.

"Other retailers follow, thinking that Wal-Mart's business case will apply just as well to them. But it may not work, because every business and every supply chain is different."

The analyst firm said that, beyond supply chain management, nobody knows how many ways RFID can be used. Known applications include security and "backdoor theft" prevention, contactless payments, advertising and promotions.

Shah advises retailers to consider smaller consulting firms, where they will find people who can identify new ways to use RFID. Unfortunately, she added, many of these small creative integrators lack the resources to execute system-wide rollouts for large clients.

RFID vendors need to educate themselves about retailing, and develop answers to retailers' problems, not just one-size-fits-all products.