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Where Are All the Retailers?

If more retailers don't see the benefits of using RFID technologies, the pace of adoption will remain slow.
By Mark Roberti
Jun 05, 2007During RFID Journal LIVE!, our recent conference and exhibition, I was chatting with a senior executive from a major pharmaceutical and consumer-care products company. "Where are all the retailers?" he asked. "Right now, it's just Wal-Mart and Target. If more retailers don't jump on the bandwagon, we'll never achieve the promised benefits of RFID technology."

Albertsons and Best Buy have also announced RFID initiatives, and many other retailers have projects under way, as well. Some of The Home Depot's suppliers, for instance, tell me that the home improvement retailer say they will need to start tagging goods in 2008. But the executive's point is a valid one: most retailers have been sitting on the sidelines while a few do most of the work—evangelizing the technology, proving the business case, establishing data-sharing standards and so on.

The third annual retail study by the Retail Systems Alert Group reveals that 44 percent of manufacturers have at least developed an RFID implementation timeline, while only about 9 percent of retailers have done so (see Survey Says Manufacturers Drive RFID Uptake). Why is that? I've heard some retailers say they just don't see a significant return on investment from RFID, but that's a little hard to understand. The industry average for out-of-stocks globally for mass merchandise stores is 8 percent. If RFID can put a significant dent in that—and Wal-Mart's initial results show it can—why are retailers finding it hard to get an ROI?

I've heard some people question whether Wal-Mart is really seeing a reduction in out-of-stocks at RFID-enabled stores. I've been to one of the RFID-enabled stores, seen the process and written a case study, and I believe RFID is making an impact (see Wal-Mart Tackles Out-Of-Stocks). The technology will make a much bigger impact as Wal-Mart figures out new ways to use RFID data and changes processes to take advantage of the data. (Wal-Mart has said it doesn't want to introduce dramatic changes to the way people do their jobs, because that would require a great deal of retraining and could lead to more problems than it solves.)

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