Bloomie’s Item-Level RFID Test Shows Results
A 13-week test where EPC Gen 2 passive
UHF RFID tags were put on denim jeans in a Bloomingdale’s
store found that the technology improved inventory accuracy by 27 percent
and count speed by 96 percent versus bar codes used in a control store.
The tags, which were placed on the jeans as they entered the
store, were removed at checkout.
Bill Hardgrave, executive director of the RFID Research Center, part
of the Information
Technology Research
Institute (ITRI)
at the Sam M. Walton College of Business at the University of Arkansas, told RFID
Journal, that inventory in the test location “was
counted by both bar
code and RFID to
get a comparison of accuracy and to compare to system counts. It also provided
an efficiency measure of RFID over bar code.”
The count speed was
seen as a critical advantage that RFID had over bar codes, according to
the study’s authors. “Bloomingdale’s
could take inventory counts 26 times with an RFID handheld reader in the
amount of time it takes to do one inventory count with a barcode scanner…
Certainly, inventory accuracy is higher when taking and updating inventory
counts bi-weekly than it is when taking inventory counts annually.”
Discussion Questions:
What does this latest retail environment test of RFID technology mean
for its actual implementation? When will RFID be ready for retail prime
time and how will it be used?
I see two results from this test: my “smart wall” of jeans is closer than ever, and yet farther than ever. How is that possible? It’s fantastic that RFID demonstrated in an apparel environment something that Best Buy and others have proven in a hard goods environment: RFID keeps better inventory counts, and you can get them accurately and fast. However, the test proves, yet again, a distressing lack of consumer-facing elements. I note that Bloomie’s carefully removes the tags at checkout, in a nod to consumer privacy. But if you’re going to go to all that trouble, why is there nothing designed into that test or that application of RFID that benefits the consumer? It would be so easy: there will be a day when someone makes it possible to find the right size of jeans in the right color without having to paw through every ever-lasting pair of jeans in the store.
And you know what? If you did that, I bet the increase in sales would more than justify the investment in RFID to make it happen–all by itself.
What Nicki is talking about is customer service. Excuse me, show me where anyone is spending any money on real customer-facing service technology in the apparel environment; they are few. Retailers will spend five dollars to save four, but they won’t spend thirty-five cents to make a dollar. Retailers are now investing in self-service technology in the name of customer service, but are they doing that to make money or save money? And since when is self-service customer service? In today’s apparel retail environment customer service is job none.
This is an important test of RFID’s capabilities. But frankly, it comes as no surprise that RFID brings more accuracy into inventory management in comparison to barcode. And it doesn’t seem headline worthy that counts would be quicker. The notion of counting RFID tagged merchandise sounds a little ridiculous. It reminds me of the early days of POS when retailers scanned the merchandise tags a second time to make sure the POS scanned them.
The real issues here are what is the value of accuracy. For example, if I was the Jeans Buyer at Bloomingdale’s and knew exactly what was at each store all the time, what value could I create for the company? The answer is not clear because the information systems and supply chain systems would have to align themselves to reporting and fixing recurring problems and opportunities.
The hope is that with alignment of the back office, the Jeans Buyer would decrease inventories by minimizing over stocks and size buildups. The buyer would increase sales by minimizing lost sales and eliminate some stock counts at store level. These results would also engender customer loyalty to all the Jeans Shoppers. And because Bloomie’s would be gaining on competition, this would likely increase share holder value. Not bad.
The nagging question remaining is whether these benefits would offset the costs for the tags, the RFID infrastructure and the back office rework.
Nikki is right on about the huge potential for using the RFID technology for direct shopper/shopping benefit. But there is another issue here: what you measure, you manage. Retailing is a terribly mercantile business that is mostly about stores and merchandise–and shoppers as they arrive at the store–and almost nothing about the actual shopping process. There are even massive efforts here and there to measure staff productivity, sometimes in fine detail. Measure the shopping process? Aren’t we already “shopper focused?” NO! What you do not measure, you do not manage, period.
This was virtually an identical test to one done earlier by the same group for two stores at Dillard’s.
Frankly, the test results in both cases are hampered by write-ups in the reports that are not sufficiently clear (having read both full reports).
In the Dillard’s report, if I remember correctly, most actual numbers were given. In the Bloomingdale’s report, only percentages were used (e.g., 26% improvement in the number of “perfect” counts, where the actual equaled what the perceptual inventory system said). So, it is hard to guesstimate what the real dollar benefit is or extrapolate ROI.
Clearly, this is where we are headed. The only question is timing. Certainly it won’t be too long before most retailers–especially in apparel–solve the bothersome problem of the PI often being wrong.
One interesting thing to me is that to a certain extent, you could get most of the benefits from a few hand-held readers and daily cycle counts (which take seconds, as noted), rather than necessarily installing fixed readers at lots of points in the store.
I guess we should be happy that inventory counts are faster and more accurate. However, it often seems that retailers are more concerned about their inventory count than they are about their inventory buying. It does no good to find out that I am inventory heavy on size “XX” then turn around and buy the same size mix again. It does me no good to see that we are inventory heavy in “red” in certain locations and heavy in “blue” in others if I then go and buy the same color mix across all locations.
Unfortunately, most retailers focus on after-the-fact inventory levels rather than before-the-fact inventory buying.
Inventory and logistical efficiency derived from RFID tags comes as no surprise. I assume that the time to remove the tag does not impact customer experience at checkout and also that the tags are reusable with that aspect of inventory control evaluated.
Many of us in this string are seeking the consumer benefit that may come from use of RFID. The retail industry will surely find first victory in store and inventory management, but the application of the technology to benefit consumers requires more creativity.