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Walgreens Deal Spells Promotions-Tracking Boon
Big news in the RFID promotion-tracking space came last week as Goliath Solutions announced a multi-year agreement with giant US pharmacy Walgreens to install its technology across the chain's 5,000+ locations. The deal marks one of the biggest developments to date in RFID-enabled promotion tracking. This article has a recap.
Dec 09, 2005—This article was originally published by RFID Update.
December 9, 2005—Big news in the RFID promotion-tracking space came last week as Goliath Solutions of Deerfield, Illinois, announced a multi-year agreement with giant US pharmacy Walgreens to install its technology across the chain's 5,000+ locations. The deal marks one of the biggest developments to date in RFID-enabled promotion tracking, long cited as a potentially promising application of the technology. There has not been much activity in the space, however, because the retail applications of RFID have manifested further upstream, at the point of manufacture and down through the supply chain. The implicit understanding seems to be that RFID-enabled supply chain visibility must come before downstream benefits like in-store promotions tracking can be realized. Goliath Solutions disagrees.
The company is young, founded in 2001 around the premise that the existing methods of tracking in-store promotions are inefficient and ineffective. Typically, the process is manual. An auditor travels to a small sampling (~5%) of retail locations to collect data about promotional displays in person. It is an expensive, labor- and time-intensive process that is prone to human error. Furthermore, the data only becomes available weeks after it is collected by the auditor. Given the $17 billion spent annually on promotional displays and signage, Goliath figured that retailers and consumer packaged goods (CPG) manufacturers would welcome a technology-based improvement for tracking the effectiveness of these spends.
The Goliath system employs inconspicuous RFID tags and readers to collect promotions data in near realtime. Promotional displays are embedded with tags, thereby keeping them out of sight of shoppers and store employees. (Note to privacy advocates: only the displays are tagged, not individual product items.) The readers are positioned at various locations in the ceiling and also remain unseen. They interrogate the tags and upload the data to a "store hub" server, which then relays it to an off-premises database where it is made available in report-form to authorized users via a web-based interface.
The solution is elegant in its simplicity. It is particularly compelling after seeing the sample reports, which cleanly display aggregate statistics like how many stores have ordered a promotional display, what percentage of those stores have actually installed the display, what percentage of the scheduled campaign dates were actually used, and sales generated in stores that ran promotional displays versus those that did not.
One question about the Goliath solution is whether it will be supplanted by EPC-based technology like the EPCglobal Network. Indeed, Goliath's own site considers the point, but argues that their solution is available today, while EPC-based solutions are still years off: "It is tempting to wait until EPC standards and equipments are available to address issues associated with in-store merchandising optimization. Though estimates vary and optimism abounds, it is likely to be years before EPC technology is capable of monitoring diverse in-store merchandising. Marketing and sales executives are urging rapid exploration of information-based opportunities to claim tens or hundreds of millions of dollars in lost sales opportunities and eliminate millions of dollars of waste in today's retail promotion system." Based on last week's announcement, it appears Walgreens agrees that sooner is better than later.
Read the Goliath-Walgreens announcement (pdf)
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