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Wal-Mart's Electronic Product Code Implementation Off To A Positive Start

May 18, 2004
Initial Reaction in Dallas/Fort Worth Shows Consumers Seem Ready to Give EPC Technology a Chance to Prove Itself
FOR IMMEDIATE RELEASE
Contacts:
Gus Whitcomb
479.273.4314

BENTONVILLE, Ark., May 18, 2004 - After just 18 days, Wal-Mart’s initial roll-out of electronic product codes (EPCs) is already hinting at its long-term success.

"To date, no glitches Ð only positive glimpses of what’s to come," said Linda Dillman, executive vice president and CIO for Wal-Mart Stores, Inc. "During this test phase, we’re experimenting with various tag types and tag placements to see how they impact readability on various products in a non-laboratory environment.

"We want to make this information available to our suppliers early on so that they can incorporate it into their efforts to meet the readability goals we’ve established," she continued. "From the start, we will be targeting 100 percent readability of pallets at dock doors and 100 percent readability of cases on our distribution center conveyor systems."

Wal-Mart launched its initial implementation on April 30 in the North Texas area. Cases and pallets of 21 products from eight suppliers are being shipped to Wal-Mart’s Sanger, Texas, distribution center and then onward to seven local Supercenters with radio frequency identification, or RFID, tags attached. This technology allows retailers greater visibility in monitoring product inventory from supplier to distribution center to.

The retailer will be able to share early lessons from its pilot when it brings its top 100 suppliers together in Arkansas next month. The private gathering is another in a series of group and individual meetings Wal-Mart has held with suppliers to assist them in implementing EPCs. The meeting will be followed days later by a gathering of the next 200 largest suppliers to discuss their upcoming participation.

Wal-Mart initially announced its EPC initiative in June 2003. At the time, the company stated that the first phase of implementation would involve its top 100 suppliers tagging cases and pallets of products headed to three Dallas/Fort Worth area distribution centers by January 2005. Since then, an additional 37 suppliers have voluntarily asked to meet that same milestone.

The primary consumer benefit expected during initial EPC adoption is better merchandise availability. Wal-Mart expects to do a better job of having the right product in the right place at the right time, improving the customer shopping experience.

Consumers Opt to Give EPCs a Chance
In keeping with its EPCglobal commitment to customer notice, Wal-Mart has been very active in communicating to its customers about its Dallas/Fort Worth field trial.

"We want all North Texas consumers to be aware that we’re testing the technology in the retail environment," Dillman said. "RFID is very common and already a big part of people’s lives. We want them to become comfortable with it in this new setting."

Many families adopted RFID technology early on. Today, millions of people use toll way tags, automatic gasoline payment systems, lost pet identification tags and automobile smart keys to prevent vehicle theft.

Local Dallas/Fort Worth television station, KXAS-TV Channel 5, interviewed a small sampling of customers entering Wal-Mart’s Hickory Creek store on May 6th. On its 10 p.m. news broadcast aired the same night as the final episode of "Friends," the NBC affiliate ran several customer comments, including:

"If they’re just trying to keep their shelves stocked, how can they get your personal information? It doesn’t have anything to do with you as a person."

While one gentleman stated that he wanted to ensure Wal-Mart honored its existing commitment not to collect additional personal data, none of the customers whose comments were included in the news report stated anything negative about EPCs, RFID or Wal-Mart for implementing the technology.

Wal-Mart is currently focusing on case and pallet tagging. However, in the initial test, there are three products in which the case is also consumer packaging. On the outer packaging of these two HP printers and one scanner, an EPCglobal sticker next to the RFID tag notifies customers of its existence.

To further strengthen customer notification during the initial roll-out in North Texas, Wal-Mart will be placing supplemental signage on the shelf and/or aisle where the tagged cases could reside. Information pamphlets are also available on shelf-mounted tear pads. These provide information on Wal-Mart’s EPC implementation and explain that customers may choose to keep the tags or discard them after purchasing the product.

Future Bringing More Suppliers, More Products
Moving forward from this point, Wal-Mart expects the number of suppliers tagging cases and pallets to expand every few weeks. Accordingly, consumers may soon see additional products displaying the EPCglobal symbol.

It is expected that many of these will be electronic products or other large items such as bicycles or lawnmowers. In all instances, the cases will have tags only on the outermost packaging, Wal-Mart will notify consumers of the tag’s existence and customers will retain the choice of keeping or disposing of the tag post-purchase.

About Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. operates Wal-Mart Stores, Supercenters, Neighborhood Markets and SAM’S CLUB locations in the United States. Internationally, the company operates in Puerto Rico, Canada, China, Mexico, Brazil, Germany, United Kingdom, Argentina, and South Korea. The company’s securities are listed on the New York and Pacific stock exchanges under the symbol WMT.