Given that it will take several years, at least, for companies to cost-effectively deploy RFID at the supply-chain level, it is a good bet that it will be at least that long, if not longer, for it to cost-effectively employ item-level tagging to track individual consumer usage.
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Retailers are coming to grips, albeit slowly, with the need to invest heavily in RFID technology in the foreseeable future, but now another worry is intensifying: the privacy factor.
For consumer advocates, RFID technology, which -- in theory -- can track how and who uses a certain product, is nothing less than a nightmare.
"The big scary scenario is Gillette monitoring how often you use a razor and contacting you when you throw one away to see if you want another," Gartner research analyst Jeff Woods told NewsFactor, referring to Gillette's experimental brush with RFID last year.
Such perceptions have resulted in a consumer backlash. In Germany, mass protests against the Metro Group's plans to deploy RFID technology in its European stores caused the retailer to scale back its ambitious deployment plans. It has abandoned plans to use RFID in its customer-loyalty tags, Metro says.
At the same time, a California state senator, Debra Bowen, has introduced a bill to regulate the use of RFID in retail stores.
To be sure, businesses are not likely to put concern for consumer rights or privacy ahead of their profit-making goals. (Some businesses talk a good game of wanting to protect their customers, but the widespread outright hysteria over any regulations that would mandate such protections suggests most would rather not have to follow through.)
To be fair, it is not the role of businesses to protect consumers; that is the government's role -- although some administrations do a better job than others maintaining such checks and balances.
In the case of RFID, though, the privacy advocates may be wrong.
For starters, the current applications of RFID technology are strictly at the supply-chain level, mainly in order to comply with Wal-Mart and Department of Defense mandates. Some forward-looking pilot programs are using RFID to estimate demand and ensure optimal use of shelf space -- but even those deployments are on the macro level. They do not violate consumers' privacy.
"The supply-chain use of RFID has nothing to do with privacy -- at least at this point," Woods said.
Nor does it have much to do with ROI. Simply put, there are few -- if any -- successful examples of mass RFID adoption. "The technology is not yet standardized," AMR Research analyst Kara Romanow told NewsFactor. "It is largely based on proprietary systems. Then there is the fact that there are few systems integrators that have built a track record in these deployments, so that expertise is in short supply."
In another words, it will be a long time before RFID delivers an ROI to early adopter companies.
Given that it will take several years, at least, for companies to cost-effectively deploy RFID at the supply-chain level, it is a good bet that it will be at least that long, if not longer, for it to cost-effectively employ item-level tagging to track individual consumer usage.
"The privacy issue for consumers is way overhyped at this level," Paul Zipkin, the T. Austin Finch senior professor of business at Duke University's Fuqua School of Business, told NewsFactor.
Indeed, the general consensus reached at the second annual RFID ROI Forum held in London earlier this year, was that the cost of the tags needed to drop significantly before they could be deployed profitably on product lines. Marco Waas, vice president of supply chain and technology at Unilever, was quoted as saying that item-level tagging was five to seven years away for that reason, along with other factors.
Nevertheless, it is clear that companies need to start developing privacy policies now, if only to sooth consumer anxiety. Even if a retailer's RFID deployment is merely at the planning stage, "it should have a privacy policy in place specific to RFID just to alleviate such concerns," Woods says.
However, given the rather dubious reception privacy policies have received in other areas -- few consumers take them as gospel -- companies might do well to be more proactive about their RFID outreach plans. RFID is still a mystery to most consumers, and an educational push to explain the technology should factor into the planning.
Meanwhile, there is the worry that legislation on this issue is outstripping actual implementations. Senator Bowen's bill reportedly calls for consumers to give their consent before a company can track or collect any information. "There's no reason to let RFID sneak up on us," she says in a statement. True enough. However, there is genuine concern that if implemented, such legislation could curtail the technology's development and deployment at the supply-chain level, which is where its true value lies.
Erika Morphy
daily CRM Daily, 03. März 2004
Original: http://crm-daily.newsfactor.com/story.xhtml?story_title=Analysis__The_RFID_vs__Privacy_Debate&story_id=23289&category=spcm