Wal-Mart Changing Its RFID Strategy

Written by Evan Schuman
October 6th, 2007

Wal-Mart is executing a “change of focus” with its RFID plans, leveraging RFID to improve specific business process rather than as a company-wide broad plan, according to a senior IT exec at the chain.

The plan, detailed in a speech by IT VP Carolyn Walter, is not especially new, with a focus on linking product promotion placements with purchases. But the speech?as detailed here in this RFID Journal story–does mark a more public discussion of this strategy change than Wal-Mart has done recently.

The story quoted Walter as saying that Wal-Mart’s internal research shows a 38 percent sales lift in stores that execute promotions on schedule, compared with stores that did not get the promotional items onto the floor on time.

“The goal of the third Wal-Mart initiative that Walton announced is to see whether the retailer can improve sales across an entire product category?the test category is air fresheners?by asking all of its suppliers in that category to tag cases and pallets of the products sent to the pilot locations,” the story said. “Walton says that the pilot is not yet complete but so far, so good. “We are seeing significant improvements in inventory” in the test category, she said.”

A strong criticism of RFID has been that they have not been delivering the promised Return On Investment, which is true. But an ROI determination is overwhelmingly based on the criteria and the goals set. For RFID, many retailers had initially set goals based on RFID vendor hype. Not surprisingly, it didn’t deliver.

But as consumer goods manufacturers have learned, creative RFID strategies can truly work. Consider the efforts from Procter & Gamble, Boeing, European shoe retailer Hamm-RENO Group, Dole and two different trials for Japan’s Mitsubishi, on dressing rooms and makeup.

Lending some possible background to Wal-Mart’s move was another story that ran this week. Baseline looked closely at Wal-Mart’s finances during the period of their RFID trials and found hints that the program was delivering. Although that is hardly a surprise to RFID managers in retail and the size of Wal-Mart makes projecting such things from public earnings questionably reliable, it’s still an interesting analysis.


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