Originally created 01/13/04

German retailer Metro AG to roll out 'smart' radio tags this year



BERLIN -- European retail giant Metro Group plans to roll out a wireless inventory tracking system this fall, giving a boost to the radio-frequency identification technology that is aimed at streamlining deliveries and cutting costs.

Metro said about 100 of its top suppliers would begin attaching radio frequency ID (RFID) chips to pallets and packages of goods headed for 10 Metro central distribution warehouses and 250 stores beginning in November.

The company, which declined to say how much the project would cost, hopes to have the system in place across its 800 German stores by 2007.

Use of RFID technology has been growing, from toll booth "speed passes" to systems that allow ranchers to track livestock. Last year, Wal-Mart Stores Inc. announced it would require its top 100 suppliers to attach the tags to pallet shipments by early 2005.

"This announcement builds on the activity we're seeing," said Mike Dominy, senior analyst at The Yankee Group, a Boston-based research firm. "It's certainly a positive step forward for the technology."

RFID chips broadcast a signal with information about the product, and the data can be fed directly into central computers, helping a company track the movement of goods in the supply chain quickly and precisely. The technology also could help with food safety concerns by making product tracking easier.

Since last April, Metro has been testing the technology at a so-called "future store" in the German town of Rheinberg, near its Duesseldorf headquarters.

"In the future, the use of innovative technologies will be one of the crucial competitive factors in our industry," Metro chief executive Hans-Joachim Koerber said in a statement Monday announcing the rollout.

Metro also has put individual electronic trackers on three products - from Gillette Co., Procter & Gamble Co. and Kraft Foods Inc. - in its test store. But with the chips currently costing between 30 and 50 euro cents (38 and 64 U.S. cents), it has no plans to expand the experiment, Metro spokesman Juergen Homeyer said.

A plan by clothing giant Benetton Group SpA to introduce smart tags in garments, allowing them to be tracked from factory to store, last year raised privacy concerns and Benetton subsequently said it was undecided on the project.

Metro has had no complaints about the product tags from customers, Homeyer said. But he added that in the coming weeks, the company plans to introduce a machine it has developed that would allow shoppers to deactivate the chips.

The firm said partners on its RFID scheme are software maker SAP AG, chipmaker Corp. Intel, IBM Corp. and 40 other information technology companies. Metro said Microsoft Corp. will deliver network software for the project.

Metro stores involved include Metro Cash & Carry, Real hypermarkets, which sell food and merchandise, Extra supermarkets and Galeria Kaufhof department stores.

Metro shares closed down 1.6 percent at 34.18 euros ($43.86) Monday on the Frankfurt stock exchange.