Walgreens' Rx for missing displays

Like linotypists and keypunch operators before them, retail display auditors may find their skills are fast becoming obsolete. At the nation's largest drugstore chain, the auditors who once trudged from store to store to check on promotional displays will soon be replaced by smart tags. Late last year, Walgreens announced that it would begin using radio-frequency identification (RFID) technology to track in-store promotional displays at more than 5,000 stores chain-wideÑan initiative many analysts call the most aggressive use of RFID within the retail supply chain to date.

Walgreens will use a tracking system made by Goliath Solutions that employs RFID tags to capture data on when, how long and approximately where displays are placed in its stores. Combined with point-of-sale information, the data captured by the "semi-active" RFID tags (tags that require limited battery power) will help the chain determine the best way to use those displays to boost sales. The system also can be used to notify store managers when it's time to put up displays or take them down.

Walgreens piloted the system at 50 stores in Chicago last year and intends to roll it out chain-wide within months. The retailer will work initially with 15 consumer packaged goods (CPG) manufacturers to analyze the displays' sales impact in real time. Although Walgreens won't reveal which vendors are participating in the rollout, it has disclosed that some of the displays being tracked feature over-the-counter health products, candy, cosmetics and seasonal items.

mixed signals
Speculation is that participating vendors include Procter & Gamble's newly acquired Gillette division and Altria Group's Kraft Foods.

Walgreens would not divulge how much the system costs or when it expects to see a return on its investment. But the chain clearly has great expectations for the technology. "The Goliath solution will help us customize our merchandising on a store-by-store basis and ultimately increase sales and profit per square foot," says George Riedl, Walgreens' senior vice president of marketing. "It also will help both our own purchasing department and our vendors evaluate past promotions and plans for future programs."

You can't sell what you can't see
As it moves forward with its plans, Walgreens will likely encounter little resistance from suppliers. Manufacturers have worried for years that their displays weren't getting onto the retail floor on time and are expected to cooperate with efforts to correct that problem.

As previously reported in RFID Watch (DC Velocity, November 2005), one of those manufacturers, Gillette, has actually conducted RFID pilots of its own to document problems associated with missing displays. When the company launched a disposable version of its Venus women's shaving system, for example, initial sales lagged behind expectations, sending marketing honchos scrambling for an explanation. Examination of the data collected via RFID reads at test stores quickly revealed the reason: one-third of the displays hadn't made it from the back room to the sales floor in time for the promotion's start date. Gillette says the late execution resulted in a 19-percent loss of revenue for that product.

That wasn't an isolated case. In other tests, EPC reads revealed that one promotional display had been lost in a store's back room for months and that other cases had been mislabeled or set up incorrectly. By locating the products and putting a process in place to alert store personnel when items were needed on the retail floor, Gillette boosted sales by a whopping 28 percent—a figure it was able to confirm through point-of-sale information.