Telltale tag is the future of retail

Stores are moving rapidly towards a smart shopping environment in which goods are connected to the internet via RFID

Shopping in a crowded mall can be stressful at the best of times. Throw in out-of-stock items, missing price tags and labyrinthine store layouts and it can even become a frustrating exercise in futility.

But all this could change, thanks to an emerging concept dubbed 'the extended internet', where objects - and sometimes humans - are connected to the internet by radio frequency identification (RFID) tags and similar wireless technologies.

A concept store at last weekend's Hong Kong Electronics Fair offered a glimpse of the future shopper's paradise.

For example, if you are in a garments store, clothes carrying the RFID tag will trigger a screen in the fitting room that gives information relating to the item of clothing. Data ranges from details about fabrics and available colours and sizes to suitable accessories.

Meanwhile, electronic shopping assistants play commercials about articles in the customer's vicinity. Detailed store layouts are provided, while wireless shelf labels give up-to-the-minute prices on perishable items, such as fresh produce. RFID-enabled payment cards and mobile phones speed up checkout lines.

'RFID is heavily associated with manufacturing and supply chains but when people see forklift trucks and warehouses they do not get very excited,' said Anna Lin, chief executive of industry support group GS1 Hong Kong.

'But when people see a future store concept, or even smart homes, these arouse consumer interest. Exciting things are enabled by RFID. In the future, your fridge will know that a can of milk is going out of date and send a signal to the supermarket for a fresh delivery.'

Smart homes and RFID-enabled home appliances are not expected to become a reality for most people soon. But Ms Lin said the falling cost of RFID tags and readers and a growing demand for detailed customer analytics suggest that smart stores could be a common feature in Hong Kong in three years.

RFID has been touted as the successor to bar codes since it was first used by the United States for its bomb inventory during the second world war.

But while widespread acceptance has been hindered by high costs and a lack of standardisation, increased functionality through the internet is seen as giving RFID the necessary push. Multinational blue chips Wal-Mart, Boeing and Airbus are leading the way.

'Globalisation remains the key opportunity for RFID,' Ms Lin said. 'Companies can source one component from Russia and another from Vietnam and RFID will help them keep track of that information.'

Through its proximity to factories in China and port facilities, Hong Kong could also play a role in promoting RFID, 'not so much in driving the standard, but in terms of systems integration,' Ms Lin said.

'Hong Kong is very good at applying new technologies to business processes and illustrating how they can work for us in future.'

Ms Lin said standardisation was no longer the obstacle it once was now that second-generation tags were compatible with global readers and radio frequencies used for RFID in different markets.

That does not mean the widespread implementation of RFID tags will be straightforward. Costs continue to fall (a tag at present costs about US$2, compared with US$8 three years ago), but privacy and security remain concerns.

Meanwhile, RFID's advantage over bar codes - allowing data to be transmitted passively to readers, rather than being actively scanned - could be a disadvantage in terms of widespread adoption. Researchers at Amsterdam's Vrije University were able to infect RFID tags with a virus, even though their storage capacity was only 64 kilobytes. And plans in various countries to include RFID tags in identity cards and passports have incurred the wrath of privacy advocates.

Meanwhile, RFID tagging in supply chains is already a reality. How quickly RFID enters the home will depend on how consumers value automated fridge refills against the risk of their shopping habits being broadcast to outsiders.