Store's Tag's Have You Pegged Data Keeps Retailers Updated

Walgreen Co. is expanding use of wireless tags that track in-store displays to determine whether and how the promotions entice shoppers to buy.

Walgreen has had a positive return on its investment in the system, said a spokeswoman for the Deerfield-based drugstore chain. The retailer uses the system to figure out which displays are effective, and which need to be changed.

Bob Michelson, CEO of Goliath Solutions, the Deerfield-based company that supplies the systems, explained, "Think of a display promoting M&Ms. Are you better off with a promotion offering $2 off or 25 percent off? Do the M&Ms sell better if the display is red or if it is blue? Where should the display be set up to draw the most attention?"

In one instance, Valentine's candy proved that it would sell better in the cosmetics aisle than in the candy section.

The system is in 1,000 Walgreen stores, and involves 18 of the chain's suppliers of cough drops, shampoo, cosmetics, candy and other consumer goods.

A Walgreen spokesman said the retailer plans to roll out the system within the next 12 months to its 5,693 U.S. stores in 48 states and Puerto Rico. He declined to disclose the cost involved.

Michelson said, "We believe [the Walgreens initiative] is the largest such use of radio frequency identification [RFID] tags in the retail industry."

The Goliath system is unusual in that it embeds RFID chips in merchandise display racks or stands. A handful of retailers and manufacturers use RFID tags embedded in each individual product, exclusively for high-ticket items. Those costs can range from 20 cents to $2 per chip, depending on the distance at which the chip is read by a reader. The Goliath system is focused on the display, not the individual products, and can be most cost efficient in large deployments.

When a shopper removes a product from a Goliath in-store display, small receivers placed in store ceilings read the chips' signals. A hub network "polls" the receivers several times each day. The hub asks the readers a series of questions: Are the displays set up in the store? If so, where? What time was a display put up or taken down? Have the displays been moved since the last poll?

Goliath Solutions receives the data, and analyzes it along with other data it gets from Walgreens, such as sales at each store and the sales results for each product in each display in each store.

Walgreen executives access the analysis through a secure Web site, and can communicate the results to store managers within 48 hours. Store managers also get a weekly report about the sales results from each RFID-tracked display.

Goliath wants to expand its system to other retailers, including grocery stores, discount stores and office-supply chains.

It's a fast-growing opportunity.

In-store advertising is becoming increasingly important to national-brand companies because their TV and radio commercials are being "Tivoed" and "iPoded" into thin air.

The 2006 Trends Report published by Point of Purchase Times showed that 47 percent of national marketers said they would give in-store signs and displays greater emphasis, while 15.2 percent said they would spend more on TV advertising and 12.5 percent reported a planned increase in radio ads.

Arguments remain as to whether stores are losing or gaining control over displays - and clutter - within their four walls, and whether national brands or a store's own private label brands will win the war for floor space. The issue reveals how retailers are wrestling with new technologies, including more invasive electronic ads at check-out counters and promotions that can be sent to shoppers' grocery carts and cell phones.

Brian Harris, chairman of the Partnering Group, a Cincinnati consulting firm, said technological advances have placed a renewed emphasis on the store itself.

"Digital signs on shelves, advertisements on big screens at the check-out, and 'smart' shopping carts that deliver messages based on the user's loyalty-card purchases enable the store itself to be a medium, rather than simply a place to buy goods," he said.

HOW THE SYSTEM WORKS
Jolene Clark, manager of marketing implementation for Walgreen Co., holds up an example of an RFID tag hidden in a store display at the Walgreens on Roger Williams Avenue in Highland Park. The tag - here's one hidden under a cosmetics display - sends information about sales, which is picked up by an antenna in the store's ceiling.

SOURCE: Walgreen Co