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Can't Dance
Even if some vendors aren't able to meet the deadline, the pushing of wireless product identification by the most powerful retailer on the planet is definitely going to speed the RFID plow. According to a survey released in October by Wireless Data Research Group, spending on RFID hardware, software, and services will jump to $3 billion in 2007. Right now, that number is more like $1 billion.
The prediction does not seem overly rosy, either, given the cost-savings potential of wireless inventory tracking. IBM, which rolled out a radio-tag consulting and implementation service in September, claims wireless tagging and tracking of merchandise could help reduce corporate inventory levels by as much as 25 percent. In making the announcement about IBM's new service, Faye Holland, worldwide RFID leader (IBM Global Services) for the company, noted: "IBM believes RFID's time has come."
It's coming for Wal-Mart's vendors, certainly. Jeannie Tharrington, spokeswoman at P&G, says: "We will have to implement new systems to bring these tags on board. Since we have more than 300 products, it's a huge deal." But, she says, the company expects to meet the deadline.
Other consumer-goods manufacturers may have a more difficult time dancing to Wal-Mart's tune, however. For instance, some products with RFID tags slated to go to Wal-Mart will have to be segregated, at least initially.
And then there's the small matter of paying for the technology. "Now you have a group of suppliers who don't know what they have to do to be in compliance, and they've already done their budgets for next year," says Lundstrom. "So they are scrambling to do it and figure out how to pay for it."
It's doubtful many will want to disappoint Wal-Mart, however. Bear in mind, this is a company that once did $1.43 billion in sales—in one day. "This is the cost of doing business with Wal-Mart," says Tohamy flatly. "And [the suppliers] know that and will have to comply on some level."
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