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Nonetheless, interest in RFID remains strong. Helping support continued interest are new applications that address common retail problems and support sales. Significantly, businesses are developing RFID projects that meet particular needs, rather than just responding to broad mandates from companies like Wal-Mart to tag all cases and pallets in a supply chain.
Firing up promotions
Take in-store promotions, one of the most important tools used by retailers and their suppliers. In-store merchandise promotions help boost overall store traffic and sales as well as spark sales of promoted items. But they also can cause major headaches for both merchandisers and supply chain managers if anything happens that prevents promoted products from appearing in stores when customers expect them.
A truck gets mistakenly routed to the wrong distribution center or store; a store clerk puts the wrong products on display; or a store manager simply leaves the promotional display case in a back room after deciding there’s not enough space for it on the selling floor.
There are dozens of other reasons why a promotion misfires, annoying disappointed customers who take their hope for a good deal-and their wallets-to another merchant. Multiply those reasons by tens or hundreds or thousands of stores in a chain and the retailer and its promotion partner supplier are left wondering why the promotion on which they spent tons of money and time in product development and marketing fell flat.
This is where RFID can step in to help make promotions, and all the supportive supply chain and in-store processes, easier to control.
Nothing to sneeze at
Kimberly-Clark, the manufacturer of personal care products ranging from Kleenex tissues to Huggies disposable diapers, for example, recently deployed RFID technology from OATSystems to better control how product promotions are executed in retail stores. Kimberly-Clark often commissions third-party contract manufacturers to assemble and ship promotional displays complete with products to the company’s retail partners.
But it can be impossible to ensure each participating store puts out a promotional display on time, a challenge underscored by industry statistics that 15% to 40% of stores fail to get displays on the selling floor within a planned window of time, says Mike O’Shea, Kimberly-Clark’s director of auto-ID sensing technology.
Working with OATSystems, Kimberly-Clark customized an RFID application that, after RFID tags are placed on display cases, records when a promotional display is received at a store and checked into a backroom warehouse, and when the display reaches a designated sales floor. The application, operating as part of the OAT Foundation Suite, connects via the Internet RFID data scanned by in-store readers to corporate headquarters at Kimberly-Clark as well as display partners and the retailer.
Kimberly-Clark has increased compliance with its promotions from 55% to 75% of its participating stores, the company says. If displays aren’t handled according to schedule, Kimberly-Clark and partners immediately investigate the hold-up and, in some cases, use alternate plans after discovering a store does not have space to accommodate displays.
If the cost of RFID technology continues to drop, an increasing number of practical uses may emerge, experts say. “Each time the price of RFID takes a jump down, a whole new range of applications suddenly becomes economical,” Klein says. “More of the stuff that’s been waiting to happen becomes justifiable.”
On a similar note, retailers routinely guard their early technology projects so as not to tip off their competition about any technological advantages they may be developing. As more RFID applications become justifiable, retailers are more likely to begin sharing information after enough projects have proven to work and begin producing financial results, Klein contends.
“This year we started to see some open dialogue on RFID among retailers, which was very encouraging,” Klein says. “On a technology operations level, retailers don’t usually talk to one another. But when it hits the chief financial officer level with good results, CFOs do talk with one another. They play golf together, and when one says how RFID helped them solve problems, we’ll have more CFOs directing inquiries at their companies about how RFID can help them as well.”