U.S. Department of Commerce RFID Workshop

1. The Retail Industry Leaders AssociationRepresenting The World’s Leading Retailers and TheirProduct & Service Suppliers U.S. Department of Commerce RFID Workshop

2. Mission & Values • The Retail Industry Leaders Association (RILA) is an alliance of the world’s most successful and innovative retailer and supplier companies – the leaders of the retail industry. • RILA members represent more than $1.4 trillion in sales annually and operate more than 100,000 stores, manufacturing facilities and distribution centers nationwide. • Its member retailers and suppliers have facilities in all 50 states, as well as internationally, and employ millions of workers domestically and worldwide.

3. Sample Membership • AutoZone • Best Buy Company • Dollar General Corporation • Family Dollar • The Home Depot • The Gap • Lowe's Companies • METRO Group • Michaels Stores • Petco • Petsmart • Target Corporation • Tractor Supply Company • Wal-Mart Stores • 3-M • American Greetings • Coca-Cola USA • Eastman Kodak • Energizer • Federal Express • The Gillette Company • Hallmark • Johnson & Johnson • Procter & Gamble • UPS • Unilever • Time Retail, Inc. • VF Corporation • Williamson Dickie

4. Status of Retail RFID Implementation • Still very much in infancy • As a whole, industry is in a discovery & exploratory mode. • Wal-Mart supplier mandate • Albertson’s & Target have issued compliance targets • Globally, Metro AG issued a November 2004 target

5. Retailers and Suppliers Are Optimistic About the Future of RFID • 78 percent thought RFID would eventually meet or exceed today’s expectations • Considerable concern about immediate costs and complications of implementing RFID • Desire to invest smartly and get the basics of RFID right before extending it to the entire supply chain • Top concerns remain ROI, Security and Privacy and implementation cost Results from RILA Annual Leadership Exchange, September, 2004

6. Potential RFID Benefits for Retailers • Increased supply chain visibility • Reduced on-hand inventory and less use of “safety stock” • Increased sales through reduced out of stocks • Reduced transportation cost and shipping volumes • More accurate forecasts and stock replenishment • Reduced shrink and theft in the supply chain • More efficient product recalls – keep product off the shelf

7. Potential Supply Chain Savings All figures in U.S. Dollars and represent worldwide spending and losses Carnegie Mellon, Stanford University, AMR Research

8. Potential RFID Benefits for Consumers • Better in-stock - product on the shelf when you want it • Improved Product Selection • Product Freshness for Dated Goods • Easier Identification on Recalls • Product Authenticity – Curbs Counterfeit Merchandise • Potential for Easier Returns

9. Customer Satisfaction is Key to Retail Success • Customer acceptance and awareness of RFID/EPC is a critical component to successful RFID implementation. • Considerable efforts in ongoing pilots to notify and educate customers • The retail and supplier communities were key to the development and adoption of the EPCglobal guidelines for consumer products including notice, choice, customer education, and data security.

10. CUSTOMER Customers vote with their feet every day • Retailers are focused on enhancing the shopping experience, they spend millions of dollars on making their stores more inviting to the consumer. • Retailers and product suppliers have no interest in doing anything that will turn their customers away -- it would cost them dearly. • Customer acceptance is key to industry-wide adoption.