Japanese administration plans pioneering project for tagging all retail products nationwide
Together with five partners from the retail industry, the Japanese Ministry of Economy, Trade, and Industry (METI) is aiming to achieve new heights in retail RFID adoption. In an official announcement, METI proposes RFID tagging of all retail products by 2025 – from cheap chewing gum to expensive delicacies. By 2025, up to 100 billion products per year will have to be labelled with RFID tags. As part of this pioneering project, Japan‘s 24-hour convenience stores are establishing the next generation of self-checkout systems in order to combat the negative effects of an ageing society and the resulting shortages in the retail workforce.
Written by RFID & Wireless IoT Global with exclusive statements by Ralf Kodritsch, Director Global Segment Manager RFID Solutions, NXP Semiconductors
Japan plans large-scale RFID project with billions of tags
Japanese retailers face difficult challenges: demographic changes, such as reduction in birthrates and increased life expectancy, will lead to shortages in the workforce and to an increase in the cost of skilled labour. The Japanese administration has recognised this problem and is taking steps to counteract it. Together with retail partners Seven-Eleven Japan, FamilyMart, Lawson, Ministop, and JR East Retail Net, the Japanese Ministry of Economy, Trade, and Industry (METI) has been working on a declaration aiming to introduce 100 billion electronic tags per year.
Published in April 2017, the declaration specifies the conditions under which all products sold in Japanese convenience stores must be tagged with RFID. By 2025, the large-scale tagging of products will enable retailers to automate their processes and to get ready for the challenges of tomorrow’s retail environment.
First pilots in convenience stores announced for 2018
In 2018, the partnering retail companies are piloting RFID tags for select product groups to enable item-level product monitoring. Products presenting particular challenges, such as microwavable, metal-packaged, ultra-thin, or frozen products, are excluded from the rollout for now. These products will be integrated into the project as a later process step. Part of the information gathered will be used for optimising the supply chain. A long-term goal of the project is a unified production cost of one Yen or less (below one dollar cent) for RFID tags.
The ministry will support technological development through grants in order to ensure RFID deployment for stores selling products costing less than 100 Yen. The project partners aim to establish an integrated IT landscape in which all products have been RFID tagged at the source by their producer. Efficient management of all products could also enable new channels for sales and deliveries.
“NXP Semiconductors views the Electronic Tag Initiative and the resulting use cases as a pioneering project which could have a snowball effect on the entire RAIN RFID industry. The project initiated by the administration is unique in its scope and the number of involved players from all areas – administration, technology, users, manufacturers, and researchers.” - Ralf Kodritsch
Automated self-checkout counteracts labour shortage
In addition, the five convenience store companies partnering with METI will introduce automated self-checkout registers nationwide in order to counteract the labour shortage. The price of all items in the shopping basket can be read automatically, which enables the updating of stock levels and the processing of payment at the same time. In 2018, the retail chains will initiate the rollout in metropolitan areas. By 2025, the rollout is scheduled to be completed across all of Japan.
The next step – fully automated stores without any employees – is being considered as well. All five project partners will be using the same RFID labels to ease the burden on the label providers. METI is hoping to spread RFID technology to other retail sectors, such as supermarkets and drug stores. The cost estimates for the implementation in 50,000 stores range between 50 and 100 billion Yen (between 370 and 740 million Euros) – peaking at costs comparable to the construction of Hamburg’s Elbphilharmonie.
Pioneering project with world-wide ramifications
IC manufacturer NXP Semiconductors is one of the project’s technology partners. Ralf Kodritsch, Director Global Segment Manager RFID Solutions, NXP Semiconductors, shares his insights: “NXP Semiconductors views the Electronic Tag Initiative and the resulting use cases as a pioneering project which could have a snowball effect on the entire RAIN RFID industry. The project initiated by the administration is unique in its scope and the number of involved players from all areas – administration, technology, users, manufacturers, and researchers.
The results achieved in Japan will impact European and American retailers and food producers. The benefits of RAIN RFID enabled retail products and packaging can be multiplied in other regions and combined with self-checkout solutions or contactless payment. The success of the Electronic Tag Initiative will depend on collaborations and continuous flow of information between all stakeholders.”
RFID is the technology of choice
Ralf Kodritsch states: “The tags used in the project have to fulfill certain requirements, such as fitting the form factor of the products or delivering optimum performance and high read rates. There is no ‘one-size-fits-all’ solution. Some tags must be suitable for metallic packaging, liquid packaging, or refrigerated products, which will result in a certain amount of tag diversity. In order to generate the most sustainable ROI possible and to minimize the logistical effort, however, tag variety has to be limited as much as possible.
The RAIN RFID industry needs to work on a common solution that involves technology providers, product manufacturers, and retailers. The stated goal is to reach a cost level of one dollar cent per day by 2025. At a scale of 100 billion tags per year, this goal is possible in the long term. The first pilots will be launched in 2018 to explore the tag parameters needed for widespread market introduction. RAIN RFID is the technology of choice and future combinations with other technologies are conceivable.”