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Wal-Mart, Sam's Club Push RFID Further Along

Carolyn Walton, Wal-Mart's VP of information technology, revealed three new initiatives that are part of what she called a "change of focus" in the retailer's RFID program.
By Mary Catherine O'Connor
"You have probably heard from a number of consumer packaged goods [Wal-Mart suppliers] that by tracking promotional items, they see a sales lift of 15 to 30 percent," Walton said. Wal-Mart's own research, she added, has shown that stores that execute promotions on schedule can achieve up to a 38 percent sales lift, compared with those that failed to get the promotional items onto the floor on time.

The goal of the third Wal-Mart initiative, Walton explained, will be to determine whether the retailer can improve sales across an entire product category—the test category is air fresheners—by asking all suppliers in that category to tag cases and pallets of products sent to the pilot locations. Walton noted that the pilot is not yet complete but going well so far. "We are seeing significant improvements in inventory [in the test category]," she said.

Studies have shown that tagged cases of items shipped to RFID-enabled stores are less likely to experience out-of-stocks, relative to items not shipped in tagged cases. Workers can quickly identify tagged cases of replenishment product as they enter a store's loading dock, and use RFID-enabled handheld readers to quickly locate the cases in the back of the store. Improving the availability of all items in a category should enable Wal-Mart to capture sales from customers who are brand-loyal and would likely go elsewhere for a specific product if it were not available on the shelf.

According to Simley, 600 of Wal-Mart's 61,000 U.S. suppliers are already tagging cases and pallets of some of the products they ship to the retailer's RFID-enabled distribution centers. The hot-spot tracking and category-saturation initiatives, he says, will not require many retailers outside of the 600 to begin tagging.

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