altierrelogo_stationary-logo-copy.jpgRetailers are still in the dark ages when it comes to changing prices on items on store shelves. San Jose, Calif.-based Altierre allows them to join the 21st century by enabling retailers to change store-aisle prices on the fly.

The company sells product shelves lined with RFID (radio frequency identification) tags with liquid crystal displays. Store owners can use it to make pricing changes in just one store, regionally, or across a whole chain. The company said that of all the possible RFID applications, retailers considered this to be their No. 1 problem.

These so-called Class 4 RFID tags replace the 40,000 to 60,000 paper price tags in a typical store, which take considerable time to update or change. The retail industry spends an estimated $40 billion a year changing prices manually, according to Altierre. The tags are two-way tags with both active and passive communication.

This bright idea has enabled the company to raise a third funding round of $22 million. The Galleon Group led the round and returning investors included ATA Ventures, the D. E. Shaw group, Dupont Capital Management and Labrador Ventures. To date, the company has raised $52 million since the company was founded in 2003.

The company is co-developing its system with several of the nation’s top-10 grocery chains. The promise is big savings for retailers. With Altierre’s system in place, an executive at a retailer’s headquarters can change the price of any product in some or all stores via computer commands, which are transmitted to the tags through wireless radio signals. It gives retailers much more flexibility to change prices based on store traffic and season. The tags also let retailers instantly launch promotions such as “buy one, get one free.”

Companies such as NCR and others have tried similar approaches in the past but the concept never got off the ground. Some companies, such as Wal-Mart, are in the midst of rolling out RFID tags to keep track of goods in the supply chain and in distribution warehouses. But they haven’t used them much on store shelves.

Altierre has a test center where it has its chips and software in place. The company says it is getting good feedback so far. RFID has raised considerable privacy concerns, but mainly out of a fear that retailers will eventually use it to tag individual retail items, which could be tracked wirelessly. Altierre, however, is putting the tags in shelves, not on store items. Hence, tracking an item isn’t possible after a consumer buys it.

But shelf-tagging can raise concerns. Back in 2003, anti-RFID activist Catherine Albrecht raised alarm bells when she learned companies were testing shelf-tagging along with video surveillance technology. (Go to Spychips and search on “store shelves.”) Wal-Mart tested a kind of shelf-tagging in 2003 but ended the experiment because of privacy concerns. IBM has also talked about the concept for a number of years, which raises the question: If the idea has been around for a long time, why hasn’t anyone done much with it so far?

The company is run by Sunit Saxena, chairman and CEO. He said the company is now moving toward production but can’t talk about customers because of non-disclosure agreements.

RFID has been slow in rolling out in the retail supply chain because the system requires an investment in new technologies, such as the wireless tracking systems. But the benefits of RFID are that it can be much more useful than barcodes. If Altierre can piggyback on the RFID warehouse infrastructure and get its tags into store shelves and its readers into the hands of store employees, that is half the battle. Altierre might also be the application that gets RFID into the stores, Saxena says, and then the infrastructure “could be the gift that keeps on giving for the retailers.”

After that, the company says that it will be able to save retailers a lot of money and effort. But it has to steer clear of any privacy concerns as it does so.

Saxena says the company will disclose later the exact architecture of its technology and how much it costs. He says it will be priced so that retailers can get a return-on-investment in a year or so; meanwhile, the tags last five years.