company news about Grupo Exito Launches Major Electronics Tagging Pilot

By Mark Roberti

Dec. 7, 2011—Grupo Éxito, one of the largest retail chains in Colombia, has launched a major pilot in which the company is placing EPC Gen 2 passive ultrahigh-frequency (UHF) RFID tags on every item at a new electronics store—known as Éxito Techno—in an innovative effort to determine if radio frequency identification can improve the traceability of products across the supply chain, while also reducing shrinkage, by tracking items from distribution center to point of sale. The deployment will remain in the pilot stage through at least the end of this month, the company reports, after which the results will be analyzed.

"Éxito has always been a company that uses technology to achieve a competitive advantage," says Luis Fernando Castañeda, Éxito's head of loss prevention. "We heard about the benefits RFID was bringing retailers in Europe and the United States, including improved inventory accuracy and reduced shrinkage, so the company decided to put some resources into better understanding how RFID could improve the way we do business."

Every item sold at the new Éxito Techno store is tagged with an RFID label.

Grupo Éxito had already conducted several RID pilots (see RFID Heats Up in Latin America), but this year, the company's management decided to be more aggressive. Given that it was expanding by opening stores that sell only electronics—a category prone to high shrinkage rates—the retailer opted to launch a major pilot at its first such store, which debuted in May 2011. The firm chose to tag everything sold at the store, including low-cost items, such as technology magazines and gift cards. The team is employing Avery Dennison's AD-224 RFID tags for most items, and AD-805 tags for smaller products, such as USB drives.

Exito's Luis Fernando Castañeda Goods are tagged at the distribution center using two Zebra Technologies RZ-400 RFID label printer-encoders. Before an order is shipped, employees at the DC utilize a Motorola Solutions MC3090-Z handheld reader to confirm that the correct items were picked. The company chose to use a handheld rather than install an RFID portal at one of its dock doors, because it was easier than ensuring that orders for the Éxito Techno store always moved through the portal-equipped dock door. An Impinj Speedway portal was set up at the store's single receiving dock. When the store places an order with the DC, larger items—such as televisions and DVD players—are placed onto pallets. Smaller products, such as USB storage devices and packages of batteries, are placed within totes, which are then sealed. When a shipment of merchandise arrives at the store, an employee uses a pallet jack to rotate the pallet in an RFID portal's read field, to maximize the chances of reading every item. When a truck from the DC, containing merchandise, arrives at the store, employees use a pallet jack to remove the pallets from the vehicle. The workers rotate each pallet by walking around in a circle while holding onto the pallet jack's handle, thereby causing the pallet to revolve in the read field, and thus maximize the chances of reading every item aboard it. Totes are brought to an Impinj Brickyard near-field antenna mounted on the wall, next to the portal, and each tote is then rotated in an effort to read all items contained within. Software developed by ADT Colombia, LOGyCa and Group Éxito checks whether or not 100 percent of the expected items were read. When goods are missed, a store employee utilizes a Motorola MC3090-Z handheld reader in an attempt to capture each item's ID number. The process of receiving a delivery at the store can take 20 to 30 minutes, but is still much faster than the two hours or more previously required for workers to unload a truck and then count each item "The read rates are very reliable," Castañeda states. "With a little effort, we can confirm receipt of every item sent from the distribution center. We now have visibility of what is leaving the distribution center and what has arrived at the store. If there is not a perfect match, we can investigate why." In addition, interrogators were installed at the point of sale. Currently, staff members still employ bar codes to ring up purchases, but the items' RFID tags are also read using a handheld RFID reader, and the store's database is updated to indicate that merchandise was sold. If someone attempts to leave the building with an unpurchased item, prototype gate antennas—provided by ADT Colombia and powered by an Impinj R420 RFID reader—interrogate that product's tag and trigger an alarm to sound. Smaller items are tagged and put inside totes. To read the tags, a store employee places each tote on a shelf equipped with an Impinj Brickyard near-field antenna. related content Narian Technologies to Launch NFC RFID Applications for Customer Service GS1 Releases Privacy-Assessment Tool for RFID Users Registration Now Open for RFID Journal's 10th Annual Event What You Need to Know About RFID Reader Antennas The RFID system went live on Oct. 10. The plan, Éxito reports, is to continue tagging items at least through the end of this month, after which the company plans to prepare a report estimating the reduction in labor costs associated with receiving goods into inventory, the decrease in shrinkage as compared with the electronics departments of other Grupo Éxito stores and the electronics store's first few months of operation, and the ability to confirm with 100 percent reliability that items shipped from the DC arrived at the store. The pilot could have a significant impact on RFID adoption in electronics, Castañeda says, if it proves that an improvement in tracking goods from DC to store, and in tracking in-store inventory, can significantly reduce shrinkage levels. A 5 percent decline in shrink, he notes, would be sufficient to deliver a return on the company's investment in tags and readers

The retailer worked with LOGyCA, a Bogotá-based consulting and services firm, which helped to design the system, and ADT Colombia, which worked with Éxito and LOGyCa to develop an application for matching items shipped with those arriving at the store.