Wal-Mart is Not Infallible

Filed in archive RFID Basics on May 31, 2004

"Wal-Mart is not infallible." That's a soundbite from a recent CIO Today article, and one that the marketplace should keep in mind.

Wal-Mart -- together with a few other large retailers like Britain's Tesco and Germany's Metro -- is largely responsible for the sudden popularity of RFID (radio frequency identification) technology. Wal-Mart has mandated that its top suppliers implement RFID technology by 2005. That mandate in turn has sparked a scramble by companies to learn about RFID and consider adopting it to improve efficiencies in their own supply chains.

But -- don't think RFID is a sure thing yet.

The article makes an important point that I think many people have overlooked: Wal-Mart may just be taking a risk on RFID -- and it's not clear whether that risk will pan out:

"I think people underestimate Wal-Mart, or at least make false assumptions about their capacity for risk," says Paul Zipkin, the T. Austin Finch senior professor of business at Duke University's Fuqua School of Business. "Wal-Mart is pragmatic about innovation."

Its executives are willing to allow an educated gamble on a new product, market or technology (RFID) to become a very expensive proposition. Certainly, Wal-Mart is serious about the initiative and has drafted its suppliers into the campaign as well.

"But if it doesn't work, they'll drop it with no regrets," Zipkin told NewsFactor. Or, the initiative ultimately could prove to be a mixed bag for Wal-Mart -- not quite reaching its original vision, but still delivering value on tactical projects.

Time will tell how widespread RFID becomes.

My money is on RFID taking on a huge role in our lives over the long term. However, I follow the "hype cycle" theory. We will go through a period of intensified market hype, followed by a short period of disappointment and disillusion, only to bounce back with renewed fervor. And the second time around, companies will understand what to do with RFID much better. At that point we will see the greatest innovation and accelerated adoption of RFID.