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While there's much talk about the potential of RFID at retail, most of the actual activity associated with the technology is still taking place in the supply chain arena. The reason for this is that item-level tagging of products inside the store, the most obvious application of RFID, is still too cost-prohibitive for retailers to pilot.
Still, there are other ways that the technology can deliver benefits inside the store, applications that don't involve costly, experimental item-level tagging. Deerfield, Ill.-based drug chain Walgreens has recently demonstrated this, with the deployment of a new solution that uses RFID technology to ensure that point-of-purchase displays are set up on time, deployed in the prescribed locations, and taken down as scheduled.
Following a pilot project that began in 15 Chicago stores back in 2004, the drug chain has signed a multiyear agreement with Goliath Solutions, also based in Deerfield, to install its RFID-enabled display-tracking system chainwide at more than 5,000 stores.
The patented Goliath tracking system uses RFID technology to electronically capture approximately where, when, and how long displays are placed within Walgreens' stores.
To track POP displays, Goliath installs RFID readers about the size of a VCR tape, as well as small antennas, in the ceiling of each store. Depending on the size of the store, Goliath uses either one or two of these antennas. Deploying the hardware takes less than a day: The vendors that supply the POP materials attach a credit-card-sized RFID tag to each display, and the tag emits a signal that's read by the equipment in the ceiling. No RFID tags are attached to the merchandise.
Goliath customers get dynamic access to the data collected in the stores through a secure Web site. The data can be presented via customized reports that are sorted against attributes such as product, promotion, location within a store, fixture type, and elapsed or total time in/out of compliance.
One benefit that this provides to all parties involved is that it ensures compliance in setting up promotional displays on time, and in the correct store locations.
"Retailers lose some sales opportunities simply because, in the rush of day-to-day activities, many displays are simply overlooked and not brought out to the sales floor, or at least not brought out at the right time," says Bob Michaelson, c.e.o. of Goliath. "The system allows a retailer to track the execution of these display setups from a central location and in real time."
This means that headquarters can notify stores that haven't set up displays to do so, or to set up those that will generate the most sales based on corresponding marketing activities.
Previously, Walgreens' method for checking compliance was a "manual process" of visiting the stores to inspect the displays, according to Michael Polzin, director of external communications for the chain. Now, as the Goliath system proliferates in the chain, operations and purchasing executives can check on the status of POP materials electronically -- and presumably be able to correct problems while there's still time.
"Tests have demonstrated that insight into POP execution will prove valuable to store operations and purchasing executives," says Polzin. "If there are any problems, we should know about it right away and be able to take care of it while the promotion is still going on."
But the system's benefits go beyond simple compliance. By combining sales data with the information collected by RFID, Walgreens will be able to analyze the effectiveness of POP displays, notes Polzin. The next step will be to use the POP analysis to work with vendors on improving and customizing displays.
"Goliath's tracking system will help us customize our merchandising on a store-by-store basis, and ultimately increase sales and profit per square foot," says George Riedl, Walgreens' s.v.p. of marketing. "It also will help both our own purchasing department and our vendors evaluate past promotions and plans for future programs."
Working initially with 15 consumer packaged goods manufacturers, Walgreens will use the Goliath system to analyze in real time the sales impact of store displays. The system also can be used to inform store managers which displays to put up or take down.
While Walgreens expects to have the system installed chainwide by the first half of 2007, the retailer's not stopping there: A little further into the future, it will begin mining the historical data produced by the system, to spot trends. "The results of POP displays should become measurable, somewhat like the Nielsen ratings for television and Arbitron ratings for radio," explains Goliath's Michaelson.