Executive Trends in Retail
Por Brad S. Ellman, oct 16, 2007
Securing retail commerce has already begun with Congress now considering measures to improve oversight by boosting funding and stiffening fines.
Recent quality problems with imported products have made it clear that retail commerce is not secure. There have been hundreds of product alerts published by the US Consumer Product Safety Commission (USCPSC) in 2007. Of the 52 alerts in August, 9 were for (federally banned) lead content in paint on children’s toys imported from China. These recalls have been widely publicized, but this is the proverbial tip of the iceberg.
At present, USCPSC and customs personnel are overwhelmed and understaffed. The CPSC has come under fire for lax enforcement despite seeing its staff steadily drop from 786 employees in 1974 to an all-time low of 401 today. Despite the reduction in personnel, recalls have steadily increased every year (See Table 1).
What remedy does the consumer; manufacturer or retailers have available to them when a foreign manufacturer is identified for shipping sub-standard or fake products? The only viable remedy will be the global standardization of product identification to track every product that crosses a retail scanner. A daunting task to say the least. Securing individual products can take many forms, by both overt and covert means. Barcode information, RFID, tagged inks, laser etchings; chemical and biological identifiers are all possible solutions.
There are a number of high performing retailers and manufacturers that have already begun the process.
- Michelin is running pilot programs to incorporate an RFID identifier for proof of authenticity of their tire products.
- New Balance has initiated an RFID pilot program for tagging individual shoeboxes for inventory, shrink and anti-counterfeit purposes.
- Ellesse sportswear uses product-unique 2-d bar codes embedded into their woven labels for authenticity.
- Callaway Golf etches product-unique 2-d bar codes on golf clubs’ heads for track & trace and authenticity purposes.
- Pfizer is working on an RFID solution to tag all bottles of Viagra sold in the USA.
Congress is now considering measures to improve oversight by boosting funding and stiffening fines. Regardless of the form of security, it is incumbent on retailers and manufacturers to work with the USCPSC to ultimately help standardize protection for the consumer. Ultimately it is the manufacturer, importer and retailer who are responsible for the quality and veracity of their products. The burgeoning industry of total product security has created a hot skill area and new human resource demands.
HVS Executive Search has identified this trend, and has been at the forefront of recruiting executives into these positions. In future articles, we will take a closer look at security best practices and associated costs.