business news in context, analysis with attitude

Fascinating piece this morning in looking at Wal-Mart’s investment in radio frequency identification (RFID) technology and what it means to the retailers with which it competes.

“What do you call it when a company announces a multibillion-dollar technology initiative with no preexisting infrastructure, no software code and an 18-month deadline to delivery?” Salon asks. “In most cases you'd call it a recipe for disaster. In the case of Wal-Mart, a company with the power to force others to follow its technology agenda, you'd simply call it ‘tough love.’”

Or, in Wal-Mart’s case, standard operating procedure.

While noting that a number of manufacturers have gone along with Wal-Mart’s demands because they have decided that it is imperative that they “set their strategic clocks to Arkansas time,” Salon also notes that other major food retailers such as Safeway, Kroger and Albertsons have made the same determination and set their sails to head in the same direction.

Salon poses the question: “But is it really the right direction for anyone besides Wal-Mart? Some industry observers suggest that supermarket chains that are attempting to survive in a Wal-Mart world may find that no matter how many technological ‘efficiencies’ they introduce, they will never be able to challenge Wal-Mart in the area where it remains supreme -- price.” And, in fact, Wal-Mart’s sheer size makes it almost impossible for these other retailers to match Wal-Mart’s level of investment.
KC's View:
We’ve speculated for a long time that RFID is actually Wal-Mart’s master plot to drive every other retailer into bankruptcy. The Salon piece has done nothing to disabuse us of that notion.

The other important part of the Salon piece is that it reaches the conclusion that Wal-Mart’s competition may want to focus on things other than RFID and low prices if they are to be effective. Like, maybe, better customer service. Doing a better job stocking products that people want to buy rather than those that manufacturers want to sell. And finding new and innovative ways to be relevant to the customer’s needs and desires.