RFID trial to track retail promotion effectiveness

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By: Wise Marketer Staff |

Posted on May 25, 2006

RFID trial to track retail promotion effectiveness

A new six-month 'proof of ROI' programme is being initiated by RFID technology firms OATSystems, ADT (part of Tyco Fire & Security) and Intel, to validate the return on investment from RFID-enabled retail promotion tracking displays and equipment, with the participation of five US retailers and five or more CPG manufacturers.

The three technology companies are to provide RFID hardware, software and services for a ten store retail deployment to help retailers track promotional products and provide feedback data to suppliers (such as Proctor & Gamble and Kimberly-Clark).

To help validate the ROI, an independent academic institution of the retailer's choosing will be asked to establish the parameters of the study, monitor control stores, and deliver a final report on the project's ROI.

Early successes According to Milan Turk, customer and consumer leader for Proctor & Gamble, "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. Those pilots clearly demonstrated that the EPC enables work processes to be fine tuned or revised to improve the efficiency and timeliness of product arriving on the store floor."

Trade promotion spending by manufacturers is a massive budget item, usually representing 12% - 15% of sales for most. But many studies confirm the day-to-day experience of manufacturers and retailers, showing that the returns on trade promotions are often less than satisfactory.

According to OATSystems, Real-time Promotion Execution (RPE) is a new RFID-centric business process that aims to help consumer products manufacturers and retailers to increase their promotional effectiveness, eventually leading to increased sales, decreased costs, and greater shopper satisfaction.

The technology RPE uses RFID-tagged displays and promotion product cases to measure in-store promotion execution by tracking where and when the displays and promotion inventory are in the store.

Manufacturers and retailers can then track when the items reach the store, when they're moved to the sales floor, and how long they're there, in almost-real time. This information is then integrated across many stores to be manipulated with analytical tools. This process increases promotion sell-through, allows for the correction of poor in-store execution and promotion intelligence, and lowers the cost of promotions management.

Six month pilot The proof of ROI programme will extend over six months, involve ten stores at five different retailers, and five to ten large consumer products manufacturers. When all of the participants have been identified, ADT will survey each retail site to determine optimal placement of ADT's Intel-based read points, antennas and portal frame.

OAT's OATxpress system will capture, filter, and manage RFID data from the edge to enterprise applications throughout the promotional events. OATaxiom will operate on Intel Itanium 2 processor-based servers at a corporate location, providing the analytics platform and a supplier portal to share and evaluate promotional programmes between retailers and suppliers.

The research study will track control groups against live implementations and provide a full analysis at the end of the six-month trial.

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