Walgreen using RFIDs to keep an eye on success of store displays

Walgreen Co. is one of the first retailers to use wireless "smart"chips to track in-store displays to determine whether the promotionsentice shoppers to buy merchandise.

"Today, there's no other way to track this information, other thansending a human being into Walgreen's 5,200 stores," said DonWhetstone, director of merchandise planning and research for theDeerfield-based drugstore giant.

The smart chips, called radio frequency identification, or RFIDtags, are embedded into the displays during manufacturing. The chips'signals are read by small receivers placed in store ceilings.

A hub network "polls" the receivers a few times each day. The hubasks the readers a series of questions: Are the displays set up inthe store? If so, where? What time was a display put up or takendown? Have the displays been moved since the last poll?

The company that supplies the tracking system, Deerfield-basedGoliath Solutions, receives the data and analyzes it along with otherdata it gets from Walgreens, such as sales at each store and thesales results from each item associated with each display in eachstore.

Walgreen executives access the analysis through a secure Web site.Nearly 300 Walgreens stores have the technology, and the entireWalgreens chain is scheduled to get it next year.

Whetstone watches the results to detect a spike in sales. That canbe a tipoff that a display is set up at just the right point in astore to catch a shopper's eye.

"I can give insight to stores that haven't yet put up thedisplays, and they can use the information to add incremental profitto the bottom line," Whetstone said.

The return on investment is already positive for the RFID system,which Goliath started installing three years ago.

"It's the only use of RFID I've seen that has a quick return oninvestment for manufacturers as well as for us," Whetstone said.

The manufacturers are the consumer-product companies that aredesigning the displays and placing their merchandise inside them.Fifteen vendors that represent major drug-store products, includingcosmetics, candy and over-the-counter drugs, are putting the tags ontheir displays. Neither Walgreen Co. nor its suppliers put RFID tagsinside the merchandise on Walgreens store shelves.

So far, 1,000 displays have been tracked, said Bob Michelson, CEOof Goliath Solutions.

Goliath Solutions has 36 full-time employees and 18 part-time, butit's still what Michelson calls an "early stage" company.

The RFID tracking has unveiled a few surprises. Last year's fluseason showed that shoppers would buy cold and cough drops at thefront of the store as an "impulse" buy, without first seeking themout.

"Normally, you'd think of a flu remedy as a 'planned' purchase,"Michelson said.

The insight led Walgreen executives to e-mail store managers toput the display at the front of the store rather than near the cough-and-cold aisle.

The next step will be the ability to order new displays to beshipped to more stores when the RFID system reports a big spike insales of a specific product.

"We're building the capability to do that," Michelson said.

David Pinto, editor of Chain Drug Review magazine, said Walgreen'suse of RFID inside displays is "hugely innovative" because it'simportant that the retailer figure out which of its many displaysactually work.

e-mail: sguy@suntimes.com