Concern from consumers about the origins of the products they purchase is prompting retailers to start using mobile technologies to track provenance and sustainability of goods. But costs could hold back widespread adoption, at least for the time being.April 29, 2013
In mid-January European consumers were shocked to discover that many of their favorite frozen beef products had been made using horsemeat. Over the following weeks Europe’s press unfolded the story of a complex pan-European purchasing and supply chain scandal that shook consumer confidence in the traceability of ingredients in frozen meat-based products.
The levels of outrage expressed across Europe varied depending on local attitudes to eating horsemeat. But what was shared was a loss of confidence in the ability of frozen food retailers to source ingredients responsibly: Several weeks after the news broke sales of frozen beef-based products were still down over 40% in both France and the UK.
But even before the horsemeat scandal, a growing number of consumers had been asking questions about the origins of the food on their plate and the clothes on their back.
“Consumers are becoming more concerned about product origins, from where they were produced to how they were produced, and by whom,” says Paula Rosenblum, managing partner at retail research firm RSR Research. “I believe retailers are going to be ultimately driven to provide this information.”
The continued spread of smartphones could provide retailers with a relatively cost-effective method of doing so. In the fourth quarter of 2012 smartphone sales rose 38.3 percent from the same period the previous year to reach 207.7 million units worldwide, according to research company Gartner.
Already a small handful of retailers are testing or deploying mobile technology that enables consumers to check the provenance and sustainability of the goods in their stores. One is the high-end clothing brand, Burberry, which at the London fashion show in February showed a radio frequency identification (RFID) service that enables customers equipped with smartphones to track the entire production process of an item of clothing.
Burberry sewed RFID chips into the linings of coats and bags, which consumers then scanned with a smartphone or tablet that logged into the company’s site. The RFID chip activated a video that showed the various steps in the item’s production, from initial design sketches through to final display on the catwalk. In addition, customers visiting Burberry’s flagship store in London’s Regent Street can use the same RFID chips to prompt videos to appear on mirrors, which are equipped to turn into screens.
The cost of an RFID chip represents only a tiny fraction of the price of a custom-made luxury handbag. However, RFID is likely to prove too expensive to become widespread amongst lower-margin retailers, according to analysts..
“RFID is [comparatively] costly even though it has come down in price,” says Deena M. Amato-McCoy, retail research analyst at Aberdeen Group. “It’s much cheaper to produce QR codes than to include RFID tags.”
The Canadian food retailer, Sobeys Inc., is using quick response codes for an initiative it launched in October 2011 to enable consumers to track how and where some species of seafood purchased in its stores were caught. The effects of overfishing have received considerable media coverage, prompting consumers to seek information about where and how seafood is caught. Sobeys Inc., which sees offering sustainably sourced and traceable seafood as a key differentiator, provides online information about where and when certain species were caught, profiles on the crew that caught the seafood, photos of the boat, and even access to the captain’s log book, all via a QR code next to the price barcode.
Analysts contend that consumer activism will be necessary to drive further moves by retailers to use technology to provide up-to-date information on how they have sourced the products on their shelves.
“I believe we still have some battles going on in this country [the U.S.] on what the producers are willing to reveal and the consistency in the things they say,” says Rosenblum at RSR Research.
Amato-McCoy agrees: “It really comes down to the consumer, and them challenging the retailer and saying they want more information,” she says.
The advantage of using QR codes is that stores can update product information on their back-end computing systems without requiring store personnel to change signage, explains Rosenblum. “[However], the downside technologically is that a pretty large number of consumers don’t even know what a QR code is,” she says. “This is generational, so it may be premature [to use QR codes], especially where food is concerned.”
Amato-McCoy argues that younger people readily understand QR codes.
Nevertheless, retailers may simply choose to make information available online that consumers have to seek without the help of QR codes, says Rosenblum. “As we see a generational shift, technology can make it a lot easier for retailers and brand managers to put information in one place and then send consumers out to ‘get it’,” she says. “I don’t think putting the information directly into the QR code is nearly as useful.”
However retailers opt to display supply chain information, providing a clear, up-to-date vision of their processes will equip them to quickly respond to consumers' concerns in the event of questions over their sector's conduct, and thereby restore trust in their products.
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