Target puts RFID rollout on the fast track

Discussion
May 20, 2015

Target plans to complete one of the largest rollouts of item-level radio frequency identification (RFID) technology in retailing by next year.

According to A Bullseye View blog article penned by Keri Jones, executive vice president, global supply chain and operations at Target, the company is now working with suppliers to insert "a ‘smart label’ on price tags" to improve inventory accuracy and reduce the incidence of out-of-stocks.

The rollout of the technology will begin in "a small number of stores late this year" before going chain-wide in 2016. The plan is focus on key categories including women’s, baby and children’s apparel, and home décor, according to Ms. Jones. The products were chosen because of their general popularity but also because they represent some of the items most frequently purchased online and then picked up in-store. Click and pick orders now account for 15 percent of Target.com purchases.

Target RFID diagram

Source: Target’s A Bullseye View blog

"This unobtrusive but significant technology will increase efficiencies by providing greater visibility into our inventory," wrote Ms. Jones. "That means guests will better be able to find out whether we’ve got the item at their Target store or at others nearby."

In a separate but related note, Ms. Jones also announced Target is a sponsor of the RFID Lab at Auburn University. The facility, which will open this week, will focus on ways RFID can improve customers’ shopping experiences.

Despite the upbeat tone of Ms. Jones’s article, Target is actually playing a game of catch-up when it comes to item-level RFID. Fifty-seven percent of the retailers surveyed in the "2014 GS1 US Standards Usage Survey" reported implementing item level Electronic Product Code-enabled radio frequency identification. Target is among the 21.1 percent that plan to implement the technology within the next two years.

What will implementation of item-level RFID tracking in categories such as clothing and home décor mean for Target’s ability to reduce out-of-stocks in stores? How do you see the use of RFID affecting the chain’s omnichannel sales efforts?

Braintrust
"Hopefully the RFID technology will reduce Target out-of-stocks, but it can’t help if Target didn’t order enough inventory to begin with. Target frequently does not order enough inventory to cover items featured in its circulars, causing early out-of-stocks."
"This is a good first step for Target but they have much more work to do. As Max said, they need to insure that they have ordered enough of the product to restock the shelves — and in the realm of clothing and home decor they need to stop seeing out-of-stocks as a good thing."
"Item-level RFID is an exciting development for retailers and their supplier partners, but the real impact of the technology will happen when it moves beyond operations-oriented activities like inventory to customer-facing activities like merchandising and checkout."

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11 Comments on "Target puts RFID rollout on the fast track"

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Max Goldberg
BrainTrust

Hopefully the RFID technology will reduce Target out-of-stocks, but it can’t help if Target didn’t order enough inventory to begin with. Target frequently does not order enough inventory to cover items featured in its circulars, causing early out-of-stocks. As Target ramps up its BOPIS efforts inventory management will become more important. The BrainTrust has frequently been ask to comment on changes Target is making to its product lines, both hard goods and grocery. Accurate inventory projections and fewer out-of-stocks could make the retailer more relevant to consumers.

Paula Rosenblum
BrainTrust

Max’s remarks are indeed well-taken.

Still I’ve really warmed up to RFID as a tool for inventory visibility. That’s quite different than as a replacement for physical inventory, which I think remains years away.

I would imagine the process is fairly straightforward — the book inventory says there’s a pair of size five jeans in stock. The sales associate can’t find it quickly. So s/he walks around the area with an RFID scanner to see if it can be located. If it is simply out of place, the product is located and sold.

I’m good with that. Updating the books, on the other hand, is way too complicated without full store coverage.

Zel Bianco
BrainTrust

This is a good first step for Target but they have much more work to do. As Max said, they need to insure that they have ordered enough of the product to restock the shelves — and in the realm of clothing and home decor they need to stop seeing out-of-stocks as a good thing. It may make an item temporarily more desirable, but Target is not an auction house and they won’t profit from rising demand if there is not product to sell.

Ron Margulis
BrainTrust

Item-level RFID is an exciting development for retailers and their supplier partners, but the real impact of the technology will happen when it moves beyond operations-oriented activities like inventory to customer-facing activities like merchandising and checkout. A good example of where the technology is currently working can be seen in what Macy’s is doing with shoes to ensure they have the right styles on the floor. Take that a step further and have shoe sales reps with mobile units that can tell them what sizes are in stock (or not) and you really have something. Take it to POS and you’re approaching disruptive technology status.

Daniel Caccamo
Guest
Daniel Caccamo
2 years 3 months ago

RFID nano-technology advancements will make it a huge contributor to the accumulation of data on the purchase journey, in the “intent” to “conversion” stages, and on to the “refer” stages.

Grace Kim
Guest
Grace Kim
2 years 3 months ago

RFID data would be more useful and powerful in terms of studying the pattern of when item(s) gets placed in a shopper’s cart, whether proximity of items affect purchasing decisions and when/where an item gets placed out of the cart if a shopper changes his/her mind. Wouldn’t Target be able to predict inventory levels using UPCs? I’m not entirely convinced that RFID would provide information that UPC tracking couldn’t provide already.

Lee Kent
BrainTrust

This is a tremendous and necessary step for any retailer in the omnichannel arena. Item-level tagging is a must for product visibility as long as the systems are in place to support it. Today’s consumer wants to see that the product is there whether they buy it online or decide to run by the store.

As for overcoming out-of-stocks. I agree, RFID is only a tool. It is not the merchandise buyer/planner/allocator.

For my two cents.

Kai Clarke
BrainTrust

This implementation will certainly help OOS at store level, but it does nothing to address mislabeled, mispriced, or unscanned product. Conformity to the GS1 standard really needs to be addressed, as does the accuracy of inventory management at warehouse/back room level, and the management of shrink.

Paul Wolf
Guest
Paul Wolf
2 years 3 months ago

True inventory visibility in an omnichannel world can only be reached via item level tagging. Target’s efforts will without a doubt increase the customer commitment effectiveness across channels.

John OBrien
Guest
John OBrien
2 years 3 months ago

If the overall inventory and POS system in place can’t maintain accurate stock levels from UPC, putting the UPC ID in an RFID label isn’t going to improve it significantly. Yes, maybe locating misplaced stock, but shouldn’t a sales associate be doing this routinely? Looks to me to be more of a “next big thing” initiative (well, we had to show we were doing something!) not necessarily the right thing.

gordon arnold
Guest

Out-of-stocks are a key obstacle in efforts to gain market share in a hostile economy. While this is a widely approved retailer opinion the support data is very speculative at best. Many brick & mortar mavens feel that this is a key element required to stem the fall off of customers forsaking in store for e-commerce. If Target can succeed in this endeavor to the extent that the business can absorb the RFID rollout and use costs with no unrecoverable impact on profits, history will be written right here. Regardless of opinions, retailers should pay close attention to this for all business venues as in brick & mortar, e-commerce and omnichannel.

wpDiscuz
Braintrust
"Hopefully the RFID technology will reduce Target out-of-stocks, but it can’t help if Target didn’t order enough inventory to begin with. Target frequently does not order enough inventory to cover items featured in its circulars, causing early out-of-stocks."
"This is a good first step for Target but they have much more work to do. As Max said, they need to insure that they have ordered enough of the product to restock the shelves — and in the realm of clothing and home decor they need to stop seeing out-of-stocks as a good thing."
"Item-level RFID is an exciting development for retailers and their supplier partners, but the real impact of the technology will happen when it moves beyond operations-oriented activities like inventory to customer-facing activities like merchandising and checkout."

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