100 BILLION RFID PROJECT IN JAPANESE RETAILING INDUSTRY

Oct, 2017

Ministry of Economy, Trade and Industry (METI) Government of Japan

PARADIGM SHIFT in Japanese retail industry

Demographic issue, Shortage of Labor

125million people(2000) → 80million people(2065)

Changes in consumer-mind

→ Buying services rather than various goods. → Peer to Peer Economy

Electric Commerce

Increase in the buying internet shop by the smartphone

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880

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920

940

960

980

1000

Jan

-20

10

May

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-20

11

May

Sep

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May

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May

Per-Hour Wages（Left）

Jobs-to-Applicants Ratio（Right）

The retail industry in Japan has been facing a labor shortage and a variety of

issues across its supply chains, including food loss and returned goods.

Background

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17%

83%

（Source） Ministry of Health, Labour and Welfare, JOBS Research Center, Ministry of Agriculture, Forestry and Fisheries, The Council for the Collaboration between the Manufacturing, Distribution and Sales Sectors

Edible Portion 3.4mil t

Non-Edible Portion

16.1mil t

Food Loss (2014) Returned Goods Rate (2016)

※The amount of food aid by WFP is 3.2 mil t in 2014.

※Food loss is 6.2milｔ Including households. 6.2 mil t means that one Japanese is wasting a cup of rice everyday.

Jobs-to-Applicants Ratio and Wage Height in Retail

（Yen）

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

Total GMS SM CVS Drug HC DS

Processed Food(Left)

Daily Necessaries(Right)

Supply chain needs ”Digitization”, ”Standardization”, ”Sharing” to be more efficient and valuable.

METI is trying to make innovation by Digital Receipt, RFID, Smart Payment.

Innovation of Commercial Flow, Logistics, Payment

MANUFACTURES DISTRIBUTORS RETAILERS CONSUMERS

COMMERCIAL FLOW

Logistics

Payment

Business Message Standards(EDI) Digital Receipt

RFID(Electronic Product Code Information Service)

Electronic Data Interchange for Payment Smart Payment

Blue arrow : Done, Orange arrow: Not yet 3

Future of Smart Store

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The amount of sale has leveled off

Diversification of consumer

Rising cost

Get and analyze the data of consumer and goods

Create potential demand

Customize the service

Work efficiency and Labor saving

＜Smart Store＞

Marketing Camera RFID

Digital Receipt

Smart Payment

AI/Demand forecast

Multilingual goods information

Declaration of Plan to Introduce 100 Billion Electronic Tags for Products in Convenience Stores (April 18, 2017)

＜Qualification conditions involving the declaration＞

The companies should set the unit production price of a “dissemination-type” electronic tags to one yen or less (cost taken for processing such tags, including a combination of an IC chip, antenna and creating seals), to be attached to all applicable products (some products have special disqualifying conditions for the time being, e.g., those warmed by microwave, stored in metal containers, frozen/chilled and ultra-thin).

They should develop a system for fully accomplishing source tagging, where manufacturers themselves attach the electronic tags to their products, and in which nearly all their products can be incorporated into their system using radio-frequency identification (RFID) technology.

＜Text of the declaration＞

By 2025, Seven-Eleven Japan Co., Ltd., FamilyMart Co., Ltd., Lawson, Inc., Ministop Co., Ltd., and JR East Retail Net Co., Ltd. (operator of NewDays convenience store chains) should attach electronic tags to all products sold in their convenience stores (estimated to be 100 billion products per year) and achieve individual-item monitoring for every product.

In this process, the companies must consider providing a portion of the information that they acquire through using such electronic tags to supply chains.

The companies should start electronic tag demonstrations around 2018 by attaching such tags to products in their convenience stores in certain areas, aiming to achieve individual-item monitoring for every product.

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Annual sales of convenience stores in Japan is 100 billion dollars. And 100 billion unit goods are sold annually since the average unit price per item is 1 dollar.

Including other retailers, the number of goods sold annually exceeds 100 billion.

Influence

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Convenience Stores

The Other Retailers

100 billion RFID tag

Already Spread

Not yet Spread

Apparel etc.

1 billion RFID tag

The number of stores in Japan is decreasing. However, they are converging to robust entities through changes in their business categories.

1605583

1025058

0

500000

1000000

1500000

2000000

1991 1994 1997 1999 2002 2004 2007 2012 2014

Trend of the Number of Stores

（Source）New Supermarket Association of Japan

Number of stores

（FY）

16837

18491

10000

12000

14000

16000

18000

20000

2012 2013 2014 2015 2016 2017

Supermarket

（Y）

（Source） Japan Franchise Association

Convenience Store

43228

57052

10000

20000

30000

40000

50000

60000

2007 2008 2009 2010 2011 2012 2013 2014 2015

15,384

18,874

10,000

12,000

14,000

16,000

18,000

20,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Drag Store

（FY）

The Entire Retail

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（Y）

Number of stores

（Source）Japan Association of Chain Drug Stores

（Source） Census of Commerce, Economic Census

Number of stores

Number of stores

The Concept of this Project

The Concept of this project is to return the information read from RFID tags back to the person who attached the tags.

Agreeing to this concept is a condition to participate in this project (However, exceptions may be accepted through consultation.).

Examples of information provided by participants

Acceptance or Delivery Information

Shipping Information

Inventory Information

Sales Information

Smart Shelf Information

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The testbed will be started in Tokyo in 2018.

We will build a prototype of supply chain information sharing system, and verify the usefulness and format of the information obtained from each RFID tag through distribution of goods which is source tagged.

Source Tagging. Reading shipment tags.

Reading tags during receipt, storage, and distribution of goods.

Reading tags during receipt inspection, inventory counting, and checkout.

Reading tags with doors, refrigerators, and recycle bin.

Shipping Information Expiration Date Consumption Information

Getting supply chain information through distribution of goods which is source tagged

Testbed to Innovate Supply Chain with RFID

Scope of the Testbed

【MANUFACTURES】 【RETAILERS】 【DISTRIBUTORS】 【CONSUMERS】

Supply Chain Information Sharing System(EPCIS)

Manufacturing Date Style of Packing Inventory Information POS Data

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Fast Lane

We aim to eliminate congestion at check out through the spread of RFID.

In the testbed, test stores will be installed “special shelves” on which goods with RFID tags are displayed. When people purchase only the goods on “special shelves”, they can use Self-Checkout RFID Register (“Fast Lane”),.

＜Image of the test stores＞

The shelf of goods to be attached RFID. Goods often bought at convenience stores

are targeted for the testbed, RFID

People who purchase only goods on “special shelves” can use “Fast Lane”.

To achieve stress-free shopping.

Special Shelf

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Utilization (retail stores)

self-checkout register

Quick payment Shorten waiting time

Smart shelf

RFID reader of the shelf itself Automatically stocktaking

Exp.date: 2017/3/20

Exp.date: 2017/3/20

Exp.date: 2017/3/18

Exp. Date: 2017/3/18 1$ Exp. Date: 2017/3/20 1.2$

Reduce food loss

by automatically changing prices according to expiration date

Restrain shoplifting

by the security gate

※image: “REGI-ROBO(R)” referred from Lawson‘s website.

It is possible to automate and optimize of retail operations by attaching the RFID on each goods.

Restrain shoplifting by providing a security gate.

Reduce food loss by automatically changing prices according to expiration date.

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Issues

Reducing the cost of RFID tags, developing technologies, and improving operational methods is necessary to expand RFID to supermarkets and convenience stores.

METI is promoting industry-academia-government collaboration to tackle these problems.

Problems Current status

①Price Unit price 5￠～10￠

②Accuracy Blocking radio waves by water and metal

③Attachment Technology No technology for efficiently attaching tags to products

④Code Standardization Non-standard code is also used

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