Metro launches RFID innovation center

Metro AG, the world's fifth largest retailer, has opened a new center to demonstrate RFID (radio frequency identification) technology to its suppliers ahead of the group's smart-tag rollout in November.

The German retailer, which has been testing RFID technology -- among numerous other new IT retail systems -- at its so-called Future Store for nearly a year, has created a center in Neuss, Germany, to help suppliers prepare for the upcoming launch, Metro spokesman Albrecht von Truchsess said Wednesday.

"While we are using our Future Store to test many new retail technologies in a live retail environment, the focus of our new RFID Innovation Center is strictly RFID, nothing else," von Truchsess said. "The aim is to help our suppliers test RFID systems, such as readers and smart tags, with their different products and packaging units under real-life conditions."

The center will show RFID applications not only in the logistics area but also in the shopping and home areas, according to Truchsess. "The center will allow our suppliers to meet with our IT partners and discuss opportunities," he said.

IBM Corp. and Intermec Technologies Inc. announced deals on Wednesday to supply Metro with smart-tag technology. While IBM has agreed to provide its WebSphere-based RFID and data management systems, Intermec will deliver an RFID inventory tracking system.

Several other big-name IT companies, including Intel Corp. and SAP AG, have also agreed to supply technology.

The 1,300-square meter center has been set up within the warehouse of the group's Kaufhof department store in Neuss, Germany, near Düsseldorf.

Twenty suppliers will participate in the first phase of the RFID roll-out, which in a second phase will increase to 100 suppliers, eight central warehouses and 269 stores.

Initially, Metro will deploy RFID only in the logistics area to track pallets and transport packages, but plans later to extend the technology to products in its stores.

Metro owns and operates more than 2,300 wholesale stores, supermarkets, department stores and specialty retailers, such as consumer electronics stores, mainly in Germany and the rest of Europe.

Metro and a growing number of large retailers, including Wal-Mart Stores Inc., view RFID as a way to manage the huge flow of merchandise in and out of stores more effectively, while at the same time reducing both inventory losses and labor costs. The technology, for instance, allows warehouse personnel to instantly read an entire pallet of goods with an RFID chip reading device.

RFID tags are computer chips equipped with miniature antennae. The technology enables noncontact transmission of product information such as price, manufacturer, expiration date and weight via a radio frequency. Many retail experts believe the tags will replace bar codes over the next decade.

Concerns over privacy, however, have kept most retailers, including Metro and Wal-Mart, focused on using RFID only in warehouses and stores' backrooms, where employees can remove tags before products reach consumers. The relatively high cost of the chips has been another deterrent.