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RFID Promotions Execution Initiative Launched
RFID-based promotions tracking got another boost last week as OATSystems, ADT, and Intel announced a "proof of ROI" program aimed at demonstrating its value to a handful of retailers. The companies will provide RFID hardware, software, and services to outfit ten stores of five retailers with promotions-tracking capabilities.
May 22, 2006—This article was originally published by RFID Update.
May 22, 2006—RFID-based promotions tracking got another boost last week as OATSystems, ADT, and Intel announced a "proof of ROI" program aimed at demonstrating its value to a handful of retailers. The companies will provide RFID hardware, software, and services to outfit ten stores of five retailers with promotions-tracking capabilities. The products of five to ten consumer packaged goods (CPG) manufacturers will be the subject of the program, and the data captured by the participating retailers will be shared with the manufacturers. Finally, the program calls for "an independent academic institution of the retailer's choosing" that will study and present a final report on the results at the RFID-equipped stores and non-equipped control stores. The program will last six months.
Promotions tracking has emerged as one of the most fruitful RFID-enabled business processes in the manufacturer-to-retailer supply chain. Reports indicate that a whopping 12% to 15% of manufacturer sales are spent annually on promotions. But despite the size of this spend, both empirical and anecdotal evidence suggests that it generates poor ROI. It is a widely-recognized inefficiency ripe for business process improvement.
Among many others, a common problem is simply that retailer personnel working the floor do not put out promotional displays of, for example, new razors. By being able to track when products have reached the store, when they have moved from the backroom to the sales floor, and finally when they have been sold, a manufacturer can understand in real-time how well a current promotion is performing down to a particular store. Such visibility is unprecedented and expected to result in the capture of far more value from costly promotional spends. It is being termed real-time promotion execution, or RPE.
Proctor & Gamble has been a strong and vocal proponent of RPE, incorporating it into a proprietary, tiered approach called EPC Advantaged Strategy that the company uses to determine what it tags (see Gillette RFID Mastermind Shares Secrets). Milan Turk, customer and consumer leader for Proctor & Gamble said, "Improving display execution is a cornerstone of our EPC Advantaged Strategy that we initiated earlier this year based on pilot experience with our retail partners." Retail pharmacy giant Walgreens also strongly endorsed the concept late last year when it announced plans to roll out the RFID promotions-tracking system from Goliath Solutions across its 5,000 locations (see Walgreens Deal Spells Promotions-Tracking Boon).
Read the OAT/ADT/Intel announcement
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