Alerted to Action
To say that adoption of RFID throughout the retail supply chain has been slower than early optimists predicted would be a gross under-statement. However, it would be even more inaccurate to suggest that RFID has become less relevant or has less potential in the retail industry. Widespread implementation of all products across all retail sectors will likely not come to pass—but where RFID succeeds, it soundly outperforms other technologies.
In his opening comments at the fifth annual RFID Journal LIVE! conference held last month in Orlando, Fla., Mark Roberti, founder and editor of conference host RFID Journal, noted that contrary to rumors suggesting its demise, interest in RFID applications is not fizzling—certainly not in the health-care, pharmaceutical or consumer-product-goods industries, nor in the retail industry, where companies such as Wal-Mart, Target and Best Buy have piloted into the future.
Rollin Ford, executive VP and CIO of Wal-Mart, in his keynote address to conference attendees, affirmed that RFID is assuming a “bigger and broader role” at the world’s largest retail organization.
Ford encouraged the audience to understand the broader context of RFID’s potential, from one that will enable innovation beyond customer service and corporate profitability to one that embraces and impacts global sustainability.
Wal-Mart is thinking far beyond tagging boxes and the benefits of RFID in its DCs. Back-end efficiencies remain important, but store-level improvements are even more dramatic. According to Ford, inventory inaccuracies account for 41% of out-of-stocks, but on products involved in the RFID rollout, the retailer reduced out-of-stocks by 30%.
“Global data synchronization creates a powerful business model—the Holy Grail is to know where all our stuff is at any given time and to be able to react in real time,” stated Ford. “RFID can automatically and efficiently detect errors. Accuracy leads to efficiency, which leads to sustainability. In-stock positioning has an impact on the daily good—if shoppers find what they came for, they can avoid extra trips to the store, which translates into savings on gas and lower gas emissions in the environment.”
Real-time action: In order for global data synchronization to be effective, all trading partners need to be working from the same page. Standardization is critical to the process, and many retailers and their trading partners have begun to use the EPCglobal Network’s EPC Information Services (EPCIS) standards.
During a panel discussion at RFID Journal LIVE!, Simon Langford, director of RFID strategy and transportation systems of Wal-Mart Stores, reiterated the importance of turning real-time alerts into real-time action and, to facilitate this, the need for all trading partners to be operating on a common format.
“EPCIS gives clarity [to the process] and cuts down on a lot of efforts,” stated Langford. “Using the EPCIS common format is particularly beneficial when launching a new item.”
EPCglobal is a nonprofit organization with membership open to retailers as well as their suppliers. However, even non-members can download the EPCIS standards at www.epcglobalinc.org.
Simon Ellis, supply chain futurist for Unilever, also participated in the panel discussion, and agreed that the EPCIS format is both easy and accessible. The common format creates a scalable environment, so that processes and analysis can ramp up efficiently as new products and locations are added.
Ellis noted that the amount of Unilever’s product with RFID tracking to the store level represents a very small sample of the manufacturer’s total shipments. Currently, Unilever’s RFID tags are confined to less than 50% of the product it ships to Wal-Mart and Target stores in a three-state region.
However, he did not want to minimize the potential of RFID or the promise it holds for future efficiencies.
Sears comps hurt by energy costs
HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $216 million, or $1.40 per diluted share, for the first quarter ended May 5, compared with net income of $180 million, or $1.14 per diluted share, for the first quarter ended April 29, 2006.
“In part, our domestic operating results reflect the impact of some of the same challenges being faced by our customers, such as rising energy costs and a slower housing market,” said Aylwin Lewis, Sears Holdings’ ceo and president. “However, as an organization, we need to overcome these factors by better controlling costs and developing innovative solutions that better meet our customers’ needs and allow us to generate a more reasonable level of profitability even in the face of such challenges.”
Domestic comparable-store sales declined 3.9% during the first quarter of fiscal 2007. Sears domestic comparable-store sales declined 3.4% for the quarter, while Kmart comparable-store sales declined 4.4%. We believe these declines reflect both increased competition and the impact of external factors such as rising energy costs, a slower housing market and poor weather conditions during the latter part of the first quarter of fiscal 2007. Kmart experienced lower transaction volumes across most merchandise categories, most notably within home goods, health and beauty products, and food and consumables. Similarly, Sears domestic recorded comparable-store sales declines across most merchandise categories and formats, with a notable decline in home appliance sales, which we believe reflects both a slower U.S. housing market and the impact of increased competition.
Big Lots 1Q net sales up 3.4%
COLUMBUS, Ohio Big Lots today reported first quarter fiscal 2007 income from continuing operations of $29 million, or 26 cents per diluted share, compared to income from continuing operations of $14.5 million, or 13 cents per diluted share, in the first quarter of fiscal 2006. Including the impact of discontinued operations, first quarter fiscal 2007 net income totaled $28.8 million, or 26 cents per diluted share, compared to $13.7 million, or 12 cents per diluted share, in the prior year.
Net sales for the first quarter ended May 5, increased 3.4% to $1.13 billion, compared to $1.1 billion for the same period in fiscal 2006. Comparable-store sales for stores open at least two years at the beginning of the fiscal year increased 4.9% for the quarter.
For the second quarter 2007, the company expects income from continuing operations of 7 cents to 10 cents per share versus income from continuing operations of 4 cents per share last year. Comparable-store sales are expected to increase 2% to 4%, compared to a 5.2% comparable-store sales increase recorded last year.
For fiscal 2007, the company expects income from continuing operations of $1.25 to $1.30 per share versus income from continuing operations of $1.01 per share last year.