Retail Leader Says Top-line Benefits Will Drive RFID Adoption

On the eve of the National Retail Federation's Big Show in New York, I caught up with Bernie Brennan, former CEO of Montgomery Ward, to talk about RFID adoption in retail.
Published: January 15, 2007

This week, the retail technology industry gathers in New York for the National Retail Federation’s Big Show (NRF). On the eve of the annual event, I caught up with Bernie Brennan, former chairman of NRF and former CEO of several retail chains, including Montgomery Ward, Household Merchandising and Save-A-Stop. Bernie also knows retail technology. He invested in several companies and served on their boards, including Marketmax, Spotlight Solutions and Marc Global. In addition, he is currently on the board of Tomax, which offers software for transaction management, customer relationship management, workflow management and retail resource planning.

Given Bernie’s knowledge of both retailing and retail technology, I wanted to get his perspective on radio frequency identification. He said that he looked at a number of RFID companies about two years ago, with an eye toward investing in one. But while he felt RFID would clearly have a major impact on retail, he decided it was too early to invest. There were just too many versions of the technology, and it was not clear which companies would emerge as winners.

“Given the level of detail RFID provides on the time and location of products, it is clearly a major step forward,” he said. But for adoption to really take off, the focus needs to be on top-line revenue. “Supply-chain efficiencies and cost reductions are important, but technology that can be demonstrated to improve top-line revenue and margins are in great demand today. If RFID vendors focus on value proposition from the top-line perspective, that will accelerate adoption.”

Tomax’s software handles merchandising and price optimization, among many other retail tasks, but Bernie says the company so far has not upgraded its software to handle RFID data. “There is so much activity out there now that my point of view is we need to let it sort itself out,” he says. “We’re capturing the data at the point of sale, and in our merchandising software we are tracking inventory levels at the DC, stores, store clusters and in transport, so it lends itself well to RFID. The upgrade could be done in a matter of months when we feel the time is right.”

The time might not be that far off. Bernie says that even though retailers have traditionally been slow to invest in new technologies, they might be willing to adopt RFID sooner rather than later.

“If you look back five or six years, there was a lot of point solution software out there, and retailers were buying packages for one area and another for another area,” he says. “They got burned because a lot of the software that first came out either didn’t have the functionality, wasn’t needed or couldn’t easily be integrated with other systems, so retailers backed off a little on their technology investments around the 2003 period. What changed the market were merchandising and optimization products. RFID will be implemented much faster than other technologies have been because retailers are seeing success now. And as tight as the margins are in retail, there clearly is a focus on technology as a strategic part of the business.”