Up and Down the Street
August 1, 2004
Up and Down the Street
RFID: Bring the Consumer Onboard
By Ann Przybyla Wilkes
SFA V.P. of Communications
Radio Frequency Identification (RFID) technology is receiving extensive attention as companies prepare to comply with RFID mandates. The technology itself is not new — it has been used at gas stations and highway tollbooths for years. What is new is RFID’s increasing affordability.
As snack food manufacturers and others move forward with implementing RFID know-how, it is critical to understand what consumers think about the technology. Consumers must be taken into account when incorporating RFID for companies to leverage the technology’s full potential and gain return on their investment.
Fortunately, retail customers appear open to the use of RFID tags, as long as they are aware of it, according to a study released earlier this year by the National Retail Federation (NRF) and Capgemini, a consulting company specializing in business and IT issues. “RFID and Consumers: Understanding Their Mindset” takes an in-depth look at consumers’ attitudes concerning the development and implementation of RFID.
One key finding from the study is consumer awareness of RFID is currently low, with 77% of respondents saying they are not familiar with the technology. Among those who have heard of it, their perceptions are mixed, with most viewing RFID favorably (42%) or having no opinion (31%). The study was conducted in October 2003 using an Internet panel. More than 1,000 U.S. consumers, 18 years of age or older, were surveyed. They were asked to complete a questionnaire that included a brief explanation of RFID.
“The study clearly speaks to the need for consumer education,” said Brad Callahan, vice president and leader of Capgemini’s North American Consumer Products, Retail and Distribution Practice. “To fully realize the benefits and potential of RFID, companies must gain the trust of the consumer before RFID tags appear in their shopping carts.”
Benefits to Consumers
Consumer awareness of the possible benefits from RFID technology was measured in the survey. The potential benefits that were most important to those surveyed included: faster recovery of stolen items (71%), consumer savings stemming from reduced operating costs (66%), improved security of prescription drugs (65%), faster/more reliable product recalls (62%) and improved food
safety/quality (62%). Women tended to rate many of the potential benefits from RFID as more important than men. Consumers between the ages of 25 and 49 also rated the benefits higher than consumers in other age categories.
The good news for businesses is that some of the benefits that matter most to consumers — such as recovery of stolen items and improved food safety/quality — already are being addressed through pallet- and case-level RFID tagging in the supply chain, the report noted. Companies should make the most of this by promoting these applications when communicating with consumers about RFID.
The key concerns about RFID technology expressed by those completing the survey were the potential use of consumer data by a third party, an increase in targeted direct marketing and the ability to track consumers via their product purchases. Increased costs of RFID-enabled items and environmental and health issues were also listed as concerns by respondents.
In response to the open-ended question about what might lead them to buy an RFID-enabled product, identified factors included lower prices, convenience, improved security, awareness of benefits, privacy assurances and a better shopping experience. Many consumers said they would be willing to buy an RFID-enabled product to get the benefits that are most important to them. However, a smaller percentage would consider paying more to receive those benefits.
RFID is a topic that matters to consumers. What’s more, they have opinions that should be taken into consideration as part of any RFID strategy. If the industry fails to educate consumers about RFID, that role will default to consumer-advocacy groups, who have already raised the issue of privacy as a key concern.
“RFID is a valuable technology that will provide unparalleled benefits for retailers and consumers alike,” said NRF Chief Information Officer David Hogan.
(Editor’s Note: Presentations on RFID Technology will be given at both the SFA Management Workshop, October 24-26, 2004, and at SNAXPO 2005. More information on SNAXPO 2005 can be found on p. 41 in this issue.)
As always, we welcome your comments and ideas for future “Up and Down the Street” columns. Please send them to SFA’s Vice President of Communications Ann Wilkes at firstname.lastname@example.org or call her at 703.836.4500 ext. 204.