Big Brother in the Aisles

Marketers are working to get the most out of the $17.4 billion they spend each year on P-O-P displays.

And Kimberly-Clark is among the first manufacturers to pilot the use of RFID tags on its displays to make sure that happens.

The packaged goods company has learned that it can’t rely on the retailers alone. In fact, 15% to 40% of stores fail to move displays and merchandise to the floor on time to sync up with a promotion. Such failures result in missing crucial sales window opportunities, according to OAT-Systems, Kimberly-Clark’s RFID vendor.

But Kimberly-Clark isn’t alone. There’s a consortium of packaged goods marketers testing tagged P-O-P in CVS and Sears Kmart stores. Best Buy is working with movie studios tagging DVDs.

In an ongoing test with Wal-Mart, Kimberly-Clark is tagging displays for its Depend and Poise incontinence brands, using OATSystems’ “Mobile Tags.” Each tag lets manufacturers track product movement from a store’s back room to the selling floor. The P-O-P printing company affixes the tags before displays are shipped to Kimberly-Clark’s distribution center, or straight to the retailer’s warehouse.

RFID has already proven its worth. Sales can rise as much as 19% when synchronized with an RFID-enabled promotional display, according to research conducted last year by EPCglobal, the association that assigns electronic product codes (EPCs) for RFID use, and the Massachusetts Institute of Technology.

Kimberly-Clark spokesman Joey Mooring won’t disclose details about the test, but he calls the results “very favorable.”

For the pilot program, Kimberly-Clark focused on a monthly campaign for two brands that puts pallet displays in high-traffic end aisles. The continuity gives the company solid data showing the difference the tags can make in sales productivity and the effectiveness of promotions.

If a store’s display is sitting in the back room a rep from Kimberly-Clark’s merchandising firm, Crossmark, visits the store to get it set up.

Kimberly-Clark also checks the date that displays come down when a promotion expires.

“This allows us to track the full execution of these displays, which benefits the retailer and us,” Kimberly-Clark spokesperson Joey Mooring says.

Prior to the company’s use of RFID tracking, retailers used the correct P-O-P displays only 55% of the time. The compliance rate is now up to 75%, says Paul Cataldo, vice president of marketing for OATSystems.

Kimberly-Clark is currently concentrating on increasing compliance, rather than fine-tuning P-O-P locations on the selling floor, he says.

Kimberly-Clark and OATSystems have also developed an “RFID in a briefcase” system that uses a handheld RFID reader and a laptop computer to capture data in stores that don’t have RFID readers. The system is known internally at Kimberly-Clark as “Portable Edge.”

The Mobile Tags are the linchpin to the tracking system that Kimberly-Clark is adopting for its global supply chain. Its goal is to improve not just P-O-P compliance,s but also make its pipeline more efficient by tracking product movement in its distribution centers, proof of product delivery and shipment reconciliation reports.

Meanwhile, OATSystems is working with packaged goods marketers and CVS in the East and Sears-owned Kmart stores in the Midwest.

The testing lets marketers share the cost as they learn the system before deciding whether to adopt it for their own displays nationally. Retailers benefit from hosting the pilot test, too.

“Any time marketers can optimize promotions, it’s a benefit for the retailer’s sales,” Cataldo says.

WALGREENS TAKES RFID TRACKING NATIONAL

Walgreens is taking the lead among retailers on P-O-P management.

The drugstore chain continues to roll out its RFID tracking system and has just begun approaching marketers to get on board.

Walgreens will have P-O-P tracking in nearly all of its 5,461 stores by the end of the year. The firm is pitching brands to start using the service next year. The system lets manufacturers tag displays to track their use and to measure their impact on sales.

“It’s a bit of a chicken and egg scenario,” says Walgreens spokesperson Michael Polzin. “We wanted to get into more stores before adding more [brand] vendors. We expect to get more on board for next year.”

The rollout began 17 months ago with 15 packaged goods manufacturers spanning cosmetics, candy, over-the-counter medications and seasonal goods.

One advantage of Walgreens’ system: It can tell which location inside the store works best for a specific display.

That takes the conversation beyond the simple question of whether the display got put up, and analyzes where it can best drive incremental sales.

“If a display is doing well in stores that put it up early, we alert other stores that it’s doing well and encourage them to get it up quickly,” Polzin says. “That helps with execution.”

By the same token, marketing staffers in Walgreens’ headquarters can tell store managers to move or remove under-performing displays. Walgreens’ program is run by retail technology firm Goliath Solutions.

Other retailers are gearing up for RFID more slowly. A survey by Aberdeen Group found that 13% of retailers have earmarked money for RFID programs, but only 6.5% of them are spending any on the technology now.

Most retailers are looking at three uses for RFID: improved promotions and loyalty management; inventory management (with tags on cases or individual product packages); and product information for shoppers.

“With the cooperation of IT staff and operations managers, an RFID expert can bring double-digit improvement to virtually all areas of retail,” says Russ Klein, senior analyst at Aberdeen Group. “RFID adoption in retail is still in its early stages. The well-prepared retailer has an opportunity to lead.”
— Betsy Spethmann

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