Could the merger of Procter & Gamble and Gillette fundamentally shift the radio frequency identification movement?
RFID experts in the retail, technology and consumer goods communities eagerly are watching for cues about where the two companies, each with ambitious RFID initiatives of their own, might take the emerging technology as a unified force. P&G’s move to acquire Gillette in a $57 billion stock deal was announced Jan. 28.
“It’s nothing but good news as far as I can see,” said Kevin Ashton, vice president of marketing at ThingMagic, a provider of RFID readers. Ashton was a P&G executive loaned to the Massachusetts Institute of Technology to help found the Auto-ID Center, an RFID research lab. (Gillette was another of the center’s founders.) “It’s an intriguing coincidence that they should come together — the founding fathers of the RFID revolution we are living through.”
Most industry sources believe a merger would enhance learning about RFID applications, but no one envisioned high drama in the form of greatly reduced technology prices, at least in the immediate term.
“It’s going to be something interesting to watch, for sure. P&G is really focused on speed and [inventory] turns with RFID, while the primary driver for Gillette was shrink and theft. [I’m] not sure where they will meet,” said Greg Gilbert, director of RFID solutions at Manhattan Associates, a logistics solutions provider.
For good or for bad, it was Gillette’s test of RFID-tagged Mach3 razors that got the customer privacy debate rolling, because the antitheft system also included closed-circuit TVs trained on shoppers without their knowledge. Word that Gillette would buy up to a half-billion RFID tags in 2003 raised hopes that other volume purchases would follow and drive tag cost down; however, Gillette reportedly has taken delivery of just a fraction of those tags from Alien Technology.
“Gillette and P&G have been pioneers in RFID and have a shared interest in its success,” said Cathy Hotka, principal of Cathy Hotka & Associates, an information technology consulting firm. “They’ve been working toward common goals and their combined expertise should advance the industry.”
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The RFID expertise at both companies is often credited to Dick Cantwell, Gillette’s vice president, Auto-ID, and Stephen David, P&G’s recently retired chief information officer, but the specialty knowledge goes far deeper in both organizations, at least “two or three layers below that,” said George Reynolds, vice president of RFID at Tyco Fire & Security.
“There are folks there who have been very precise and demanding but they are fair and rational people when decisions need to be made and compromises met,” Reynolds said. Gillette and P&G “are two of a handful of true thought leaders in the marketplace and the industry is waiting to see what it means in terms of potential acceleration or sharing of learning between the organizations, on RFID in particular.”
Richard Langford, cio at Movie Gallery, a video rental chain that’s tested item-level RFID for several years, believes a Gillette-P&G merger could have an impact on tag prices, but it’s the cost of RFID readers that needs to come down. “We could install a satellite network in a store for less than it would cost to buy two readers,” he said.