February 11, 2006
Bold prediction #245

As I was standing in line at the Target this afternoon watching two transactions ahead of me pay by check (WHAT!?!) and the teen-age clerk scan products ever so slowly, I passed the time imagining how Target, and other big boxes, might make my life a lot easier.

I don't understand all the ins and outs of the RFID (Radio Frequency ID) chips, but ostensibly they send out little radio signals that can be picked up by scanners, big brother, and so forth. What if Target has RFIDs on all of its products which transmit product code, and hence price and weight? In theory, I could push my buggy to a sensor, push the checkout button and all hundred or so items in my cart would be scanned simultaneously. That alone is worth the price of admission as I don't have to watch the clerk scan everything. I suppose Target would need a scale of some sort to ensure that I didn't somehow put the 12oz RFID on the 20oz Ragu Sauce, but you get my point.

Now, there are some benefits to the scanning clerk - you get to see how Brangelina is doing, whether Brittany has had an episode, and also, at times, there are certain items that you decide you don't want to purchase. However, those are rarities for me.

Essentially, instead of standing in line to scan/scan/scan/scan/bag/scan/scan/scan/scan/bag/scan/scan/scan/scan/bag/pay, we might (will?) one day, scan/pay/bag/bag/bag/bag. Perhaps there will be wait times for bagging stations, but this might be obviated by having disposable carts (i.e., the cart is a box that is thrown in the trunk leaving behind a frame with wheels that goes back to the store).

Once the hand scanning (even self-checkout scanning) is replaced by RFID blasts, Target won't need thirty or forty checkout people, but perhaps only five or six. If they provide a cart-sized box to put my goodies in, they don't have to purchase bags and if the boxes are reusable, heck I'll bring mine back. Because my transaction costs have decreased I might a) buy more at a given time, b) be willing to pay more for what I currently purchase), and c) shop more often at Target. Those are all possible revenue enhancers for Target.

On the cost side, while there are some fixed costs in RFID equipment, RFIDs don't get sick, demand a living wage, demand expensive health care, or sue for discrimination. These would seem to be cost savings for Target.

The upshot? Higher revenues with lower costs equal greater profits (gasp!). All without having to dehumanize local workers by paying them only $10/hour. And there's the ironic question. If Target/Walmart/Costco did away with a substantial number of their employees, would this stop the attacks against said companies? Nope. They would be castigated instead for laying off the very workers who now critics claim are being exploited.

[Last note: Target, et al., could make a lot of friends if they somehow destroyed the RFIDs as you left their building, make it impossible for Big Brother to track down my Doritos and Southern Style Pilsbury Biscuits.]

Posted by Craig Depken at 11:32 PM in Economics  ·  TrackBack (0)

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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