Going for Growth

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Pete Abell

• Senior Partner/CofounderThe ePC Group, Ltd.

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Whats in Store for Retail Technology The
Retail Conference March 2004
Pete Abell Senior Partner ePC Group, Ltd
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Agenda

• Retail Technology Trends
• Data Standards
• Collaboration Areas
• Additional Technologies
• EPC RFID
• Business Issues
• Supply Chain Benefits

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Retail Technology Trends

• Standards
• WalMart
• GCI
• Other Industries/Regulators
• Payment
• Homeland Security etc.
• Wireless
• Store Level vs HQ

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Data Standards

• Data standards will impact entire infrastructure
  
• EPC- visibility throughout supply chain
• Stores - Limited
• Home - On Horizon
• Sunrise 2005
• Data Synchronization

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Payment Methods

• Smart Card Convergence
• Application Slots- Enable cross-company loyalty
  programs
• Wireless Options- Major trend in drive-through
  usage.
• Needed for Web-order/store pickup.
• Biometrics- Decrease fraud
• Fingerprint and other biometrics consumers
• Employee and supplier verification

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Transportation Management

• Web-based real-time transportation management
• Transportation optimization visibility across the
  entire supply chain.
• Technology is available now.

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Supplier Collaboration

• Collaboration with suppliers enables lowest cost
  of goods.
• PTX , CTX or ?
• Private Trading Exchange
• Wal-Mart using Verticalnet/Retaillink
• Target using Yantra
• Consortium Trading Exchanges- i.e. GNX, WWRE,
  Transora
• Extranet- One way to suppliers

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Vertical Partnerships

• Retailer/Manufacturer or Complementary Retailers
• Partner to Broaden Reach to Consumer
• Hypothetical Examples
• Return Block Buster videos to any Walgreens
  location
• Amazon.com order delivered to Sears stores for
  pick up

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Workforce Management

• Employee Information Portal
• Integrate information for closed-loop workflow
• Single, role based interface for the store and
  field personnel.
• Clientelling Devices
• Combo PDA/Cell phone or special purpose PDAs
• Retail employees sell to consumers on store
  floor.

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Advanced Retail Planning Optimization

• Forecast-based financial/assortment plans,
• Attribute affinities between old and new items
• Local Market Assortments
• Multiple Consumer Channels (e.g. Maytag Retailer
  Sales Service site)
• Integration of Advertising, Marketing and
  Promotions (AMP)
• Retail Revenue Management

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Brand Asset Management

• Content
• Digital Assets
• Product Content Management
• Specification Management

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EPC RFID Mega-Transformational Impact

• Early Signs of Rapid Adoption 1T in sales
• Marks Spencer, Wal-Mart, DOD, Tesco, Metro,
  Target, Albertsons, etc.
• More Retailers to come this year
• Supply Chain - First
• Large and Small Suppliers
• Supermarkets/FMCG Must Keep Supply Chain Costs
  Within Shooting Distance of Wal-Mart
• Scratching the Surface of RFIDs Potential

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Retail Industry Perspective

• Watching Closely
• Negative to Change
• Unaware of Realities
• Regulatory Bodies Pushing Adoption
• Homeland Security - 2003
• FDA Counterfeit Drugs - 2004
• BioTerrorism Preparedness Act - 2002
• COOL
• EU Food Act

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150 RFID Projects (ePC Group Tracking)

• Marks Spencer All Fresh Food Trays
• 230 Suppliers 10 increase productivity- No cost
  increase
• Goldwin Sportswear Grey Market Reduction 2
  of sales
• Findus Temperature Sensing Frozen
  Meat/Chicken/Fish 2 Weeks extra Shelf Life
• EU - Tesco, Metro, Sainsbury, Woolworths,
  Waitrose, Carrefour, DHL, Nokia, Argos, etc.
• US Wal-Mart, Home Depot, CVS, Target, AHOLD,
  Gillette, Kimberly Clark, PG, UniLever, etc.

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RFID Themes

• Bulk Read, No Line of Sight, Space, Time and
  Status
• Multiple Industries Beyond Retail/CPG
• DOD, DHL, Payment Systems
• Faster Adoption Item Level
• Homeland Security
• Bio Terrorism Act
• FDA Guidelines on Drugs
• High Value Business Cases
• Understand the Technology Choice
• Benefits and Savings Counterbalance Costs

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EPC RFID

• A Short Primer on RFID

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EPC RFID Definitions

• EPC - Electronic Product Code
• 96 Bits (128 R/W)
• AI GTIN Serial Number Addtl. User defined
  data
• RFID - Radio Frequency Identification
• The Technology
• Frequencies
• Range

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Source Marking Technology

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DC/Truck/Store/Home Technology
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Apply the Right Technology to the Conveyance
Layer 5 Movement Vehicle
Layer 4 Container
Layer 3 Unit Load
Layer 2 Transport Unit
Layer 1 Packaging
Layer 0 Item
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Costs and Types of RFID
Level of Automation
Other Satellite
GPS - 75-300
Real-time locating sys. (RTLS) 20-100
Two-way active RFID GTAG 5-25
Active beacon RFID 1.25-5.00
Semi-Active RFID .50-5.00
Short range passive RFID .15-.50
Very short range passive RFID .02-.06 (EAS)
Manual entry
Bar code - .001
Device Cost ()
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Which offers a large opportunity for value-added
solutions
1. Carnegie Mellon, Stanford University, AMR
Research

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Standards Bodies

• Global Standards designed EAN.UCC- EPCglobal
• Continued Research - Auto-ID Labs - US, UK,
  Australia, Switzerland, Japan, China
• ISO and ANSI

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Bar Code Differences

• No line-of-sight required
• 100-1,000 Tags per Sec Read Rate
• Passive active chips
• Read only or read/write (with locked sections)
• Long short range
• Carrier for sensing devices

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Estimated Total Costs - Supply Chain Today

• Warehouse incl. HW/SW/Integration - 1-2M
• Per Store (50K sq. ft coverage) 100K
• HQ Systems 10-40M
• Annual Tag costs .15-.90 per tagged item
  (Supplier/Private Label)

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Recommendations

• Remember The Graduate - Buy Plastic
• Establish Global RFID Policy
• Use Professional RF Engineers to assess problems
  and suggest solutions
• Do not do this just for WalMart
• Make it work within your own 4 walls
• Look at your own Supply Chain for savings
• Establish behavior change leadership
• RFID vendors want to ship silicon not solve your
  problem - John Greaves

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Pete.Abell_at_epcgrp.com

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