If Supermarket Shelves Could Talk

It's Saturday night, and you're getting ready for that blind date. But you realize at the last minute that you're out of Mach3 Turbo blades. You make a mad dash to the drugstore, only to find the racks empty. Frustrating? You bet. But take heart: There's someone even more irritated than you -- the brand manager at Gillette Co. (G ) whose job hinges on keeping store shelves full, even as items fly off them.

Relief is on the horizon. Advances tying together wireless technology, tiny chips, and Web-based supply chains promise -- at least in theory -- to track every single razor blade from the production line to the checkout counter. And as supplies dwindle, whether in the warehouse or in stores, automatic alerts to stock up will be triggered. "We'll have a world where shelves are always full," says Dick Cantwell, a vice-president for global business management at Gillette.

Behind this optimism is an ambitious project called the Auto-ID Center that has moved from the lab to field tests over the past 18 months. The center is a partnership among Massachusetts Institute of Technology, Gillette, Wal-Mart (WMT ), and 85 other retailers and manufacturers. Its goal: to link microchips cheap enough to slap on every item -- from razors to soda pop -- with a network smart enough to track them. The payoff is clear. Gillette says its sales would be up to 15% higher if shelves were always stocked.

At the heart of the project is a 10 cents piece of silver glitter. This is what the minuscule chip equipped with radio-frequency identification (RFID) looks like before a tiny antenna is added. Each item carrying this chip will be tracked by monitoring devices from the moment it leaves a factory until it's picked off the shelf by a shopper. This system dishes up far more data than the current system of bar codes. "Without RFID, we're blind," says Kevin Ashton, the center's executive director.

What makes the new system tick is the center's novel approach to RFID systems. Traditional RFID tags, used on livestock or car parts, are costly -- around $2 -- because they're smart and powerful. Besides an antenna, they contain a battery and a memory chip that stores data, such as the size or color of the item they're attached to. The center focused on putting more of this information into the network. That way, the tag can be dumber -- carrying little more than an ID number -- and cheaper, 1/20 the cost of today's tags.

Here's how it works: In the store, readers on electronic shelves or at the cash register sense when supplies are dwindling. They relay the news over radio waves to a central computer, which then signals someone in the store -- say, a clerk with a handheld -- to restock the shelves. At the same time, the system monitors the overall inventory at the store, sending alerts to a manufacturer to ship more inventory.

That's the vision. Gillette is among the first to test this. Late last year it started tracking Mach3 blades at a Tesco store in Cambridge, England. For the trials, Gillette plans to spend around $50 million for half a billion tags and for outfitting store shelves with monitors. Early results are promising, says Cantwell.

Clearly, the heavy lifting is just starting. While cheaper, the tags are still too costly for most products. Indeed, until the price of the tag comes down to around a penny, the grand vision won't become reality, analysts say. Don't expect to carry away a glittery silver chip on a tube of lip gloss anytime soon.

By Faith Keenan in Boston

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