Tag Department Stores RFID Ready

Discussion
Aug 03, 2012

The recent announcement that J.C. Penney is planning to go to mobile checkouts by the end of next year is just the latest sign that radio frequency identification (RFID) technology is driving change in the department store channel.

In a recent interview with Fortune, Penney CEO Ron Johnson said the department store was going "100 hundred percent RFID with ticketing. … Now most people use RFID for internal operations inventory management. We’re going to jump right to the customer, and my goal in 2013, by the end of 2013 is to eliminate the cash route."

Penney is not the only department store heavily invested in RFID. Macy’s Inc. has announced it will go to item-level tagging in its namesake and Bloomingdale’s chains by the end of this year. The company expects to achieve 97 percent inventory accuracy on tagged items. Initial plans called for Macy’s to tag "items automatically resupplied as they are sold to customers." These items represent roughly 30 percent of the company’s sales.

Discussion Questions: Is RFID item-level tracking ready for prime time in department stores? In your opinion, what retailer(s), either in or outside the department store channel, is deploying RFID in the most significant way?

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17 Comments on "Tag Department Stores RFID Ready"

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Ed Dunn
Guest
5 years 17 days ago

RFID reader systems have multiple antennas throughout the store to pick up tag signals. The RFID reader can report which antenna picked up the tag, allowing retailers to see cross-shopping activities done in real-time.

For example, the customer carrying the blue jeans from location #1 women’s apparel, 5 minutes later it is discovered the item-level blue jeans is now being picked up by the antenna in location #3 jewelry section, creating a real-time shopping profile. This type of data can be used to improve store experience.

My concern is security — these tags can be read by almost any RFID reader/writer off eBay and someone can swipe a pair of jeans in a foiled bag, place a fake tag with the same identifier and move on. Something I hope anybody implementing RFID would consider if they take RFID onto the sales floor.

Frank Riso
BrainTrust

Department stores as well as specialty retailers in the apparel sector can all benefit from the use of item level tagging with RFID. I think just knowing that as the store opens each day to know that you have every size, in every color, for every style in stock and on the sales floor has got to be a great benefit. Why? With RFID you can take a physical inventory everyday if need be to make sure you are in stock every day. Customers who come into the store and do not ask for help will go elsewhere if they do not find what they are looking for in your store.

For inventory management, increased conversion rates and for increases in sales RFID makes sense for department stores, apparel stores and even for discounters who have apparel departments. Bar codes started in grocery and were adapted by department stores last, but RFID will start in department stores and be adapted in grocery, who knows when!

Ken Lonyai
BrainTrust

I was heavily involved with this back in 2001. There were tests going on at companies like GAP and the promise of the technology was great. The issue was per tag cost — not system viability. The consensus then was that when item-level tagging costs would drop to $.001, RFID would go mainstream. I don’t believe they’ve dropped too much in all these years.

RFID is definitely a far better technology than bar codes (and QR codes!) and can be leveraged in so many useful ways. If retailers feel that they can cover the cost of tags and the reader infrastructure, it makes a lot of sense. My experience and gut tells me that the efficiencies and opportunities to improve customer experience far outweigh the initial investment and the time has come to seriously consider/implement RFID.

Dick Seesel
BrainTrust

Macy’s has been working on RFID conversion for at least a year, and JCP’s promised update should push this technology into the spotlight once and for all. JCP is positioning it as a way to streamline the store checkout process (by eliminating traditional checkout counters), but the real benefit to retailers will be more accurate real-time inventory management and replenishment. In fact, JCP ought to make sure that its existing and targeted consumer actually likes the sort of checkout experience being proposed — testing first would be a wise idea.

Jason Goldberg
BrainTrust

I’m really excited about some of the retail experiences that item level NFC tags will enable. People tend to focus on the fast checkout experience that item level NFC could enable, but I’m quite excited about many of the other benefits.

Most retailers are still terrified to expose their store inventory data to mobile shoppers and websites for fear of data inaccuracies. Item level NFC could allow shoppers at home to get 100% confirmation that a SKU is in-stock (and waiting for them) on their next visit to the store. The same NFC readers monitoring items can be used to monitor opt in shoppers in the aisle to better understand their path through the store and allow retailers to better personalize the shopping experience for every shopper.

I don’t know what the most compelling experiences will be, but I won’t be surprised at all if they are ones we don’t expect. Item level NFC could be a game changer for cross-channel retailers.

Joan Treistman
BrainTrust

For J.C. Penney, this is one more step in the strategy to remake their image. An expectation of 97% RFID accuracy says it all to me. It’s probably an overstatement and trouble looms ahead.

Someone has to step on the land mines before there is a smooth system for retailers and shoppers. J.C. Penney and perhaps a few others have volunteered to be the canaries in the mine shaft. They probably think the rewards are greater than the risks.

It can be an advantage for both retailers and shoppers. Only time will tell.

David Biernbaum
BrainTrust

The shopping experience needs to transform to be more respectful of the consumer’s time in the store. Department stores need to catch up with current technologies in order to help stay competitive.

Robert DiPietro
BrainTrust

RFID is absolutely ready for prime time. It could bring a whole new level to customer analytics and targeted marketing. If you put RFID in the loyalty card and can tie it to the customer, and you know where they are in the store…priceless. I remember a Tom Cruise movie, “Minority Report” where the digital signage recognized him and had custom message with his jean size — not that far off.

Raymond D. Jones
Guest
Raymond D. Jones
5 years 17 days ago

RFID has long been a technology in search of a cost effective retail application. JCP has lately been a retail disaster in search of a solution. Is RFID checkout the answer for both? Not very likely.

While RFID technology clearly offers promise for inventory control and other back office applications, its value as a customer solution is unproven. The checkout has a major impact on the shopper experience at the retailer. It should not be looked at just in terms of transaction costs.

It’s about the entire shopper experience at the store.

Technology can enable the process, but it is not the complete answer. Retailers should offer shoppers the opportunity to transact in the manner they are comfortable with, not force them to use a particular technology.

Cathy Hotka
BrainTrust

Item-level RFID empowers stores to perform inventory at will, ensuring that replenishables are always in stock. Companies that deploy it see almost immediate ROI. While a few companies are grabbing headlines, many more are planning to put it in across the enterprise.

Mark Price
BrainTrust

RFID provides some exciting opportunities for retailers. The challenge has always been the large start-up expense — the capital outlay to outfit the stores and the database work to store, track and understand the data. RFID will add another dimension to Big Data, and will challenge retailers to not only create the systems, but to understand and optimize the data.

The new prebuilt applications will help with this effort, but all the challenges with Big Data still remain.

Marge Laney
BrainTrust
5 years 17 days ago

Item level RFID has so many positives, especially in apparel, especially in the fitting room. Inventory management and mobile checkout for sure, but the fitting room is where the magic happens.

RFID combined with tablet technology is the perfect tool for the associate to up sell and cross sell the fitting room customer who is making their buying decision.

And of course, The Holy Grail; ‘fitting room conversion’ can now be easily had when RFID is married to granular fitting room traffic and occupancy data.

Ralph Jacobson
BrainTrust

A move toward mobile POS is no indication of a move toward RFID. I just want to set the record straight on that point.

The concept of RFID has been teasing retailers for literally decades. For most department store merchandise, RFID tags and readers are sufficient and can ensure security again counterfeit and other fraud fairly comprehensively. Some products tags have difficulty being read, however, that is a minority in this retail format. Food stores with plastic bags, liquids, etc. can present more readability challenges.

The cost of tags can be about 3-5 cents for apparel and exhibit a strong ROI. The bigger challenge is getting them tagged at the source by the multiple vendors. Tests have been successful globally with limited vendor participation. So, yes, with a controlled rollout, RFID is ready for prime time in department stores.

Dean A. Sleeper
Guest
Dean A. Sleeper
5 years 17 days ago
Having not yet seen justification for, or an example of RFID at every item location (let alone every article), I must confess I am skeptical. I will admit that Mr. Johnson’s background suggests he may very well know something you and I don’t know yet and it would be a real treat to witness the type of transformation of which he speaks. Others have pointed out both potential advantages as well as hurdles related to the technology and many others focus on the operational shifts. I, selfishly, am most interested in seeing how such an infrastructure would change the dialog between retailers and their customers. The opportunity to deliver far richer product content, helpful service suggestions, suggestive selling guidance and other new exchanges during the shopping trip is very exciting. While I fear that anything less than a complete and flawless implementation (have you ever seen one of those?) would hobble enhanced consumer messaging strategies…I have to say “Bring it On!” No technology we depend upon today became that way overnight. We need the kind of can do/will do attitude that Mr. Johnson brings to the party to get over the hump. I wish him well! As a footnote, I… Read more »
Mark Hill
Guest
Mark Hill
5 years 16 days ago

Yes. Large department stores have piloted the technology extensively, and concluded that item-level RFID is a proven, ready-now technology that delivers a compelling ROI through increased sales by increasing stock availability, improving inventory accuracy and visibility, and ultimately improving the customer experience. The UK-based retailer Marks & Spencer is employing RFID technology to do just that and achieving significant success. Marks & Spencer deploying RFID successfully because it is starting close to the source (at over 150 of its factories) and expanding the use of RFID tags widely to its top 200 stores, across several general merchandise departments. JC Penney has deployed RFID in all 1,100 stores, and recently announced that they will enable all items with RFID by 2/1/13, with an ambitious goal of eliminating traditional cash wrap stations and enabling customer self-check-out.

Clearly, the time to implement RFID is now, and I’m excited to help retailers drive the next wave of adoption .

Karen Bleckmann
Guest
Karen Bleckmann
5 years 14 days ago

Absolutely ready for prime time. The leaps and bounds that RFID provides beyond the barcode are hard to argue with regard to enhanced vendor replenishment, labor savings, error reduction and data collection depth and expediency. Early adopter and pilot results prove the ROI.

As a label manufacturer involved in RFID implementations for a decade, we have seen the tag price and available inlay formats move to suit apparel source-tagging needs. Retailers who deploy with an eye to cost savings from information accuracy upstream through the supply chain will see powerful results.

Speaking to the comments regarding enhancing customer experience, RFID item-level tagging of product creates a foundation to leverage the inventory management investment. For example, our company provides an RFID-enabled customer experience solution that connects the handling of product by a brick & mortar customer to on-demand digital media to engage and educate the customer while summarizing product activity on the store floor to strengthen merchandising and marketing decision-making.

Clarice MacGarvey
Guest
Clarice MacGarvey
5 years 13 days ago

In many companies RFID has already made ‘prime time’. With the average retailer working at 65% accuracy of ‘on hand’ inventory, RFID is the only solution available to achieve 99% without a massive increase in labor costs.

What makes RFID so impressive and sets it apart from any other technology is the speed, accuracy and ease of use. In all of our deployments we have been able to improve visibility and accuracy while REDUCING labor costs. Because retailers have lived with such high distortion for so many years, they have adopted many bad habits. The full benefits of RFID are still being uncovered as retailers deploying the technology have visibility and accuracy, which was never before achievable.

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