Summary Of RFID Changes at Sam's Club
Pallet Level – The new requirement is for a chain-wide rollout in 2010 at the pallet level. Previously, the company wanted pallet level implemented for its 22 distribution centers complete by the end of January. Now it appears that compliance will only be for the Desoto, Texas distribution center and its associated clubs until 2010, where the rollout will be chain-wide at the pallet level.
In addition, Sam’s has meaningfully lowed the per pallet charge for non-compliance to $0.12 per pallet, effective last November 1, which is when the previous non-compliance charge was set to increase to $2.50 from the $2.00 charge originally implemented in January 2008. In cases of non-compliance, Sam’s prints and applies and RFID tag at the Desoto facility and associated clubs. We expect this charge will increase as the chain-wide rollout moves forward.
Case Level – Now optional for suppliers. Previously, Sam’s requirement was for suppliers to be case level complaint at all 22 distribution centers by October 31, 2009. According to Sam’s, they will continue to support case level information through Retail Link as some suppliers are finding value. However, Sam’s has apparently concluded that the internal value does not warrant mandating this level of tagging.
Unit Level – The new requirement is uncertain, but it is clear this is the important step for Sam’s. Sam’s has indicated to supplies that the process for implementing “selling unit labeling” will likely require 12-18 months, but is reviewing its timetable. In our view, the implication is that suppliers should start the process now, and 2011 will be a likely target for required implementation. We expect this new timetable will be communicated sometime after Sam’s as better articulated the RFID benefits, likely by mid-summer. Previously, Sam’s wanted unit level tagging to begin at the Desoto, Texas distribution center by October of 2009 and to be completed at all 22 DC’s by October 2010
