A tale of two RFIDs

Just a couple weeks ago, P&G announced that they are discontinuing tagging of displays at Walmart to track compliance, apparently because of lack of cooperation from Walmart.

Now we see the other side of the story, with Walgreen announcing that they are expanding their efforts in using RFID to track in-store implementation of promotions. Why? Because it works:

The results have been impressive: Over the past year, our in‐store execution has grown to nearly double the industry average. Incremental sales assure us that we are on a good path to improving our customers’ shopping experience.

The lesson here, I think, is not a new one. Information is only valuable if it is used. Walmart, for whatever reason, decided that the information it gained from tagging displays was not of sufficient value to use their resources to act on it. Walgreen felt differently. The numbers seem to support Walgreen's approach, but perhapr Walmart was looking at very different numbers from their efforts.

P&G no longer tagging displays for Walmart

I'm not sure what to make of this item:

The Procter & Gamble Co. (P&G), a pioneer in the use of Electronic Product Code (EPC) technologies in the supply chain, has ceased placing EPC tags on promotional displays bound for Wal-Mart's RFID-enabled stores.

Although I haven't followed the subject closely, from the early days of RFID I have thought that its most significant application, from a trade promo standpoint, was in tracking displays for purposes of compliance monitoring. The article seems to support this view, quoting a P&G exec: "... the work we conducted with Wal-Mart has shown that this use of the EPC can deliver improved promotional effectiveness, better sales and, most importantly, higher shopper satisfaction."

So why stop doing it? It appears that Walmart was was not cooperating with the project. The article cites a P&G supplier as saying that "the company is frustrated that Wal-Mart's sales associates have not acted on the data in order to improve compliance with promotional programs."

P&G's managers, the contract manufacturer explains, "were asked to put the tag on and absorb the cost of that, and I think they felt Wal-Mart should be doing more to live up to their end of the bargain. Why put the tag on if Wal-Mart's not going to act on the data?"

P&G of course is not going to say anything like that. But they seem to hint at it:

"We've been working on these applications for close to 10 years. We have learned that to secure sustainable benefits, the use of EPC requires deep levels of collaboration between the manufacturer and the retailer, and a commitment to use the actionable visibility provided by the EPC to change business processes. "

Hmmm ... Walmart not collaborative?

In-store accountability

There have been a couple developments in the efforts to make in-store marketing more effective and accountable.

Nielsen has expanded their test of in-store measurement (we reported on it last December):

During this phase, Nielsen In-Store will extend P.R.I.S.M.'s coverage to all in-store marketing media, among them merchandising activity, retail TV and radio networks, shelf talkers, cart talkers, digital signage and other point-of-purchase displays. The research also will be expanded to a national sample of about 200 stores. Final specifications for linking information about consumer traffic and the presence of in-store media will be defined over the following six months, and the first robust reach-and-frequency measures are expected by the close of the year.

Meanwhile, Kimberley-Clark has started use of an idea that has been frequently discussed over the past couple years -- using RFID chips to track stores' deployment of POP materials.

Kimberly-Clark customized an RFID application that, after RFID tags are placed on the display cases, records when a promotional display is received at a store and checked into its backroom warehouse, and when the displays reach the designated sales floor.

Good results thus far: "Kimberly-Clark has increased compliance with its promotions to 75% from 55% of its participating stores, the company says."

As reliance on in-store marketing increases, as appears inevitable given media fragmentation, efforts such as these will become ever more important.

Another use for RFID

This is somewhat off-topic, but I'll post it since people here are interested in RFID.

Bob Lewis Automotive is using RFID-enabled car keys to automatically track test-drives, improve security and simplify key access for salespeople at its Volkswagen showroom in San Jose, Calif.

One of the things that is particularly fascinating about technology is the way it is adapted to uses far different from the original idea.

States enacting RFID legislation

At least a dozen states are considering legislation regulating the use of RFID devices. According to this article, a bill has passed the New Hampshire Assembly that would

• Require any item (e.g., product, drivers license) containing an RFID chip to carry notification
• Prohibit use of the devices to track individuals (with some exceptions)
• Prohibit devices from transmitting personal information
• And of course (this is government, after all) create a commission to study RFID

These restrictions seem reasonable to me, but, much as I believe in state sovereignty, I think this is an interstate commerce question that should probably be addressed at the federal level. Having fifty sets of rules on RFID use seems impractical to me.

Wal-Mart to suppliers: RFID or else

Wal-Mart is telling its suppliers that it's time to jump on the RFID bandwagon.

Linda Dillman, Wal-Mart's chief information officer, said that, in spite of significant improvements this year in the effectiveness of tags and lower costs, "there are some that are still entrenched in their belief that it's not going to work".

As a result, the retailer was becoming increasingly unwilling to spend time working with suppliers who adopted a "slap and ship" approach to tags – meeting the tagging requirement without engaging with the retailer on modifying and enhancing their use.

"We've started communicating to some of the suppliers who have been reluctant – which is a nice way of saying it – to say, 'We can't invest any more time in you'."

That will probably get their attention.