TWO SOLUTIONS: LOW-TECH SIGNS AND HIGH-TECH RFID 2004-03-29 (2)

David Merrefield

One of the central tenets of success for retailing is communicating with customers. Perhaps that's obvious on its face, but let's consider the various ways in which communicating can pay off.

Not only can retailers use customer communication to impart information about product, thereby boosting sales, but they can assume a voice of involvement with customers' concerns. That proactive approach is not just good business, but it can pay big dividends under challenging circumstances. For instance, should there be a product recall, it's best if consumers view retailers as being their advocates. Taking a longer view, should litigation spring from issues such as obesity, retailers that have been proactive in bringing nutritional information to their customers will be in safer harbors than those who didn't.

A question, though, centers on how retailers can best communicate with their customers. There are many available media, of course, ranging from conventional advertising to bag stuffers to newsletters to Web sites. But as a news feature in this week's SN points out, the most obvious and traditional method remains a good one, specifically the use of in-store signs.

As you'll see in the feature, which begins on Page 47, a trade association has determined that 49% of point-of-purchase advertising on the gondola -- shelf-talkers of some sort -- were effective in boosting sales. Also, 41% of signs placed in locations other than near relevant product were effective in increasing sales. These numbers, even if they run to the high side, illustrate how effective old-fashioned signs can be.

As already cited, informational signs on a subtler level can be of higher value. Such signs should be aimed at conveying retailers' interest in consumers' lives. Information could center on nutrition, low-carb diets, the new soy fad, country of origin, and so on.

"We use sign[s] for communication for virtually everything," said one retailer quoted in the news feature. "[Signs are] an excellent communication tool for our customers, and if we can't be there to help them face to face, then we try our best to help provide the information at least on sign[s]." It's about as simple as that. Conveying relevant information helps change consumers to loyal shoppers, which is always best in good times and bad.

RFID

One thing about signs: If there's a high out-of-stock situation, signs that discuss product won't do much good, and may do harm. That brings us to another aspect of this week's SN -- the slate of news features about radio frequency identification tags in the Technology & Logistics section, which begins on Page 59, plus the news article on the same topic on Page 1. Let's take a closer look at the latter.

In a bid to combat OOS conditions, Wal-Mart Stores last June mandated that suppliers must tag pallets and cases by January 2005. According to this article, all food vendors to Wal-Mart anticipate being in compliance by then. This shows as well as anything that Wal-Mart is the principal change agent in the industry now. It also shows how fast the industry can embrace change if it must.