March 6, 2009
RFID Put on Display at Walgreens
In light of the recent report and discussion
here on Procter & Gamble’s decision to pull out of a radio frequency
identification (RFID) program that placed tags on displays at Walmart locations
because of a lack of execution at store-level, it seemed fair that attention
be brought to a tagged display program at Walgreens that the chain has
publicly credited with helping it to become a more effective merchant.
Walgreens has used an RFID-based system to
enable it to determine the location of displays and the level of execution
in stores. An upgrade to the current system created by GOLIATH Solutions
and used at the drugstore chain’s stores nationally will include EPC tags
placed on displays.
David
Van Howe, vice president of purchasing for Walgreens, called the information
captured from the displays a "game changer"
for the chain.
"Not
only does it help us identify and purchase more effective programs, our
store operations teams are embracing the GOLIATH data to improve execution
throughout our chain," he said in press release.
"Store level
information about what is up and where it is in the store allows unprecedented
accountability for achieving program potential. The results have been impressive:
Over the past year, our in‐store
execution has grown to nearly double the industry average."
Revlon
is one of the vendors that has worked with Walgreens
on the RFID display program. The company’s sales director, Bill Ferry,
said, it had gained "unprecedented
insight into what works and what doesn’t with consumers."
"This
has helped us maximize our return from our displays and refine our programs
to eliminate displays that aren’t producing as effectively as we would
like," Mr. Ferry added. "For the first time, we now have an independent
measure of store compliance, and additional insight into optimal location
for our programs."
Discussion Questions: What is your takeaway
from the experience of Walgreens and Revlon using RFID-tagged displays?
Do you think this is the best approach to improving compliance at store-level
and gaining insights into what displays work and why? What are your thoughts
on the next generation of EPC-compliant system?
BrainTrust
Recent Discussions
Discussion Questions
Poll
Execution is execution! If enforced, paper technology will work. I don’t see the return on investment here.
Having the RFID tags is not the goal; having the RFID tags on pallets or products is not the goal. Determining where product is at any point in time so that something can be done if it is not in the right spot is the goal. That’s the difference between what has been reported on the Walgreens and Walmart examples. Walgreens managers are notified if the displays are not in the right spot at the right time. Walmart apparently did not make similar use of the information.
Personal security concerns, implementation concerns, partner communications, out of stocks, the high cost of testing and the questionable rewards of RFID all point to a technology trying to find a problem. This is a gimmick whose time has not arrived, and may not ever arrive. It is certainly not ready for prime time, and neither this article, nor any of the others delivers on quantitative analysis of any kind, comparing a before and after implementation in stores, vs. a comparative “do nothing” test of the similar items. Until this happens, RFID is nothing more than a technology looking to find a home in the retail world.
The challenge with evaluating the effect of process improvement efforts is that each organization has a different start point, even stores within the same organization. It could be that all the improvements at Walgreens merely brought them up to the level of Walmart. I don’t believe that to be the case, but I am keenly aware of the Hawthorne Effect. Merely by putting in the test, Walgreens may have put focus on a process that needed improvement and employees delivered.
I agree that the initial benefits of RFID will come from process improvements rather than inventory tracking or item security. Displays are a great place to begin learning, but if that is as far as you intend to go with RFID you can save a lot of money by using other means. The next steps for RFID should be pallet and case tracking so that movement of those containers can be monitored. That will be the holding point for a while because of the technology issues involved with unit level tagging.
Very good comments. The issue here is a focus on the PROCESS within the store, rather than simply input and output. And that brings us to the whole issue of transparency of what is going on on the floor of the store. RFID is one valuable (but costly) tool that we have deployed for this purpose since 2001, tracking the movement of on-the-floor displays, at that time. But this was for research purposes, and not widely deployed across dozens, hundreds or thousands of stores.
It is easily possible that RFID or UWB will be widely deployed across large numbers of stores. MediaCart and others focused on location relevant marketing to shoppers (a return to personal selling,) are driving the way to ultimately tracking locations throughout the store. It makes no difference whether you are tracking people, carts, POP displays or whatever. We can afford very sophisticated, costly, systems for research. The question is how to afford that process transparency for everyday business purposes?
I don’t think the Goliath application has broad enough scope to provide the business merits. Its investor money that made this work. (Of course, Jeff Bezos relied on “investor money” for a very long time.) What needs to be seen is that Goliath and MediaCart and their ilk are all really in the same space–in-store media. A shipper display is every bit as much “media” as a flat panel display embedded in an endcap or other product display. So Goliath is deploying a very costly system to track what is obviously a very costly and niggling problem for, particularly the brands. The 40% of typical non-compliance at retail with these promotional programs has been tolerated by retailers for years because, frankly, it isn’t their money.
Now I’m wandering a bit here, but retailers have very little process information and control because it ISN’T their money that is mostly squandered on the sales floor. The same way it isn’t their time that is squandered on the sales floor–it’s the shoppers.
If a retailer ever gets serious about the process on their sales floor, Katie bar the door, relative to expanding profits.
But back to the funding of transparency on the sales floor. It is almost certain to be driven by the move to “media” monitoring, and Goliath is touching a very important and very costly part of that media. And that’s all I’m going to say about that, just now. :>)
There are a few key issues to this product’s success:
1. Less than 20% of the displays are shipper displays with the tag included.
2. Many store managers often reuse the display for other products (check this out the next time your in a a store).
3. RFID doesn’t work in a location with metal shelving, cans and products full of liquids (you can change the basic physics of RF technology).
There are other technologies that will work better and most cost-effectively. This is the classic case of killing an ant with an atom bomb.
Susan has it right. It’s not the technology, it’s the practice that counts when it comes to optimizing In-Store Implementation. This is equally true for off-shelf display compliance, resets, planogram maintenance, new-product cut-ins, sampling programs, or floor polishing.
The retailer that formulates a compliance plan, enables it with appropriate solutions, and measures its outcome relentlessly will always achieve better performance on in-store programs. A grease pencil and a clipboard may be technology enough in some situations.
A large chain like Walgreens needs some tools to help manage scale. For fixtures and displays, RFID may in fact be useful. But it works because Walgreens also instituted the practice to make it work.
The first comment nailed it. What gets measured gets managed. The impressive results are due to the fact that the execution is being measured.
RFID faces a number of large, industry-wide hurdles to implementation which explain why it remains another unimplemented good idea. There are alternative approaches just now in place or emerging that overcome those hurdles and offer the ability to measure accurately, quickly, via accessible technology and without distortion.
The distinction between Wal-Mart’s and Walgreens’ efforts is of importance because of what it says about delivering RFID ROI. There is no material technological difference between the two deployments so, as has been argued so often, it’s really an issue of prioritization and attitude.
When P&G pulled back from it’s Wal-Mart RFID promotional tagging project, it pointed the tagged finger of blame at Wal-Mart. If the retailer doesn’t aggressively use the RFID information (whether that means putting the displays out when the tags say they’re still lying in the back or repositioning them or even rethinking what that product is a good fit for your customers), ROI has no chance.
It’s sort of like the CRM ROI argument. If line managers won’t believe and act on the recommendations made, what’s the point?
Walgreens appears to have committed to the approach much more completely, meaning not merely at the corporate level but all the way down. That is very likely the difference.
What gets measured gets done, execution is execution–absolutely correct, but how do you cost effectively execute across a brand consisting of thousands of locations? RFID has great upside potential, but the downside is a real killer: cost, and compliance. We’re always looking for ways to whip the lowly associate into shape or eliminate them completely. I think better ROI and would come from elevating the associate role and developing the human side of retail; hiring and training. It will produce knowledgeable, motivated, and happy associates who will in turn sell more and build brand loyalty among customers.
With traffic trending consistently down and the consumer in a surly mood, a friendly, well-informed associate trumps a cardboard display anytime. Let’s focus on in-store technologies that enhance the customers access and connection with store associates with measurable results rather than solutions that simply police associate compliance of routine tasks.
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Execution is execution! If enforced, paper technology will work. I don’t see the return on investment here.
Having the RFID tags is not the goal; having the RFID tags on pallets or products is not the goal. Determining where product is at any point in time so that something can be done if it is not in the right spot is the goal. That’s the difference between what has been reported on the Walgreens and Walmart examples. Walgreens managers are notified if the displays are not in the right spot at the right time. Walmart apparently did not make similar use of the information.
Personal security concerns, implementation concerns, partner communications, out of stocks, the high cost of testing and the questionable rewards of RFID all point to a technology trying to find a problem. This is a gimmick whose time has not arrived, and may not ever arrive. It is certainly not ready for prime time, and neither this article, nor any of the others delivers on quantitative analysis of any kind, comparing a before and after implementation in stores, vs. a comparative “do nothing” test of the similar items. Until this happens, RFID is nothing more than a technology looking to find a home in the retail world.
The challenge with evaluating the effect of process improvement efforts is that each organization has a different start point, even stores within the same organization. It could be that all the improvements at Walgreens merely brought them up to the level of Walmart. I don’t believe that to be the case, but I am keenly aware of the Hawthorne Effect. Merely by putting in the test, Walgreens may have put focus on a process that needed improvement and employees delivered.
I agree that the initial benefits of RFID will come from process improvements rather than inventory tracking or item security. Displays are a great place to begin learning, but if that is as far as you intend to go with RFID you can save a lot of money by using other means. The next steps for RFID should be pallet and case tracking so that movement of those containers can be monitored. That will be the holding point for a while because of the technology issues involved with unit level tagging.
Very good comments. The issue here is a focus on the PROCESS within the store, rather than simply input and output. And that brings us to the whole issue of transparency of what is going on on the floor of the store. RFID is one valuable (but costly) tool that we have deployed for this purpose since 2001, tracking the movement of on-the-floor displays, at that time. But this was for research purposes, and not widely deployed across dozens, hundreds or thousands of stores.
It is easily possible that RFID or UWB will be widely deployed across large numbers of stores. MediaCart and others focused on location relevant marketing to shoppers (a return to personal selling,) are driving the way to ultimately tracking locations throughout the store. It makes no difference whether you are tracking people, carts, POP displays or whatever. We can afford very sophisticated, costly, systems for research. The question is how to afford that process transparency for everyday business purposes?
I don’t think the Goliath application has broad enough scope to provide the business merits. Its investor money that made this work. (Of course, Jeff Bezos relied on “investor money” for a very long time.) What needs to be seen is that Goliath and MediaCart and their ilk are all really in the same space–in-store media. A shipper display is every bit as much “media” as a flat panel display embedded in an endcap or other product display. So Goliath is deploying a very costly system to track what is obviously a very costly and niggling problem for, particularly the brands. The 40% of typical non-compliance at retail with these promotional programs has been tolerated by retailers for years because, frankly, it isn’t their money.
Now I’m wandering a bit here, but retailers have very little process information and control because it ISN’T their money that is mostly squandered on the sales floor. The same way it isn’t their time that is squandered on the sales floor–it’s the shoppers.
If a retailer ever gets serious about the process on their sales floor, Katie bar the door, relative to expanding profits.
But back to the funding of transparency on the sales floor. It is almost certain to be driven by the move to “media” monitoring, and Goliath is touching a very important and very costly part of that media. And that’s all I’m going to say about that, just now. :>)
There are a few key issues to this product’s success:
1. Less than 20% of the displays are shipper displays with the tag included.
2. Many store managers often reuse the display for other products (check this out the next time your in a a store).
3. RFID doesn’t work in a location with metal shelving, cans and products full of liquids (you can change the basic physics of RF technology).
There are other technologies that will work better and most cost-effectively. This is the classic case of killing an ant with an atom bomb.
Susan has it right. It’s not the technology, it’s the practice that counts when it comes to optimizing In-Store Implementation. This is equally true for off-shelf display compliance, resets, planogram maintenance, new-product cut-ins, sampling programs, or floor polishing.
The retailer that formulates a compliance plan, enables it with appropriate solutions, and measures its outcome relentlessly will always achieve better performance on in-store programs. A grease pencil and a clipboard may be technology enough in some situations.
A large chain like Walgreens needs some tools to help manage scale. For fixtures and displays, RFID may in fact be useful. But it works because Walgreens also instituted the practice to make it work.
The first comment nailed it. What gets measured gets managed. The impressive results are due to the fact that the execution is being measured.
RFID faces a number of large, industry-wide hurdles to implementation which explain why it remains another unimplemented good idea. There are alternative approaches just now in place or emerging that overcome those hurdles and offer the ability to measure accurately, quickly, via accessible technology and without distortion.
The distinction between Wal-Mart’s and Walgreens’ efforts is of importance because of what it says about delivering RFID ROI. There is no material technological difference between the two deployments so, as has been argued so often, it’s really an issue of prioritization and attitude.
When P&G pulled back from it’s Wal-Mart RFID promotional tagging project, it pointed the tagged finger of blame at Wal-Mart. If the retailer doesn’t aggressively use the RFID information (whether that means putting the displays out when the tags say they’re still lying in the back or repositioning them or even rethinking what that product is a good fit for your customers), ROI has no chance.
It’s sort of like the CRM ROI argument. If line managers won’t believe and act on the recommendations made, what’s the point?
Walgreens appears to have committed to the approach much more completely, meaning not merely at the corporate level but all the way down. That is very likely the difference.
What gets measured gets done, execution is execution–absolutely correct, but how do you cost effectively execute across a brand consisting of thousands of locations? RFID has great upside potential, but the downside is a real killer: cost, and compliance. We’re always looking for ways to whip the lowly associate into shape or eliminate them completely. I think better ROI and would come from elevating the associate role and developing the human side of retail; hiring and training. It will produce knowledgeable, motivated, and happy associates who will in turn sell more and build brand loyalty among customers.
With traffic trending consistently down and the consumer in a surly mood, a friendly, well-informed associate trumps a cardboard display anytime. Let’s focus on in-store technologies that enhance the customers access and connection with store associates with measurable results rather than solutions that simply police associate compliance of routine tasks.