Macy’s to RFID tag everything

Discussion
Photo: RetailWire
Oct 21, 2016
George Anderson

Macy’s plans to expand its use of radio frequency identification (RFID) technology to track every item in its stores and fulfillment centers by the end of next year. The move is expected to give the department store the visibility into its supply chain needed to fully deliver on the promise of a seamless omnichannel shopping experience for its customers.

“I don’t know how, in an omnichannel, data-driven … world, you can take data accuracy lightly,” Bill Connell, senior vice president of logistics and operations at Macy’s, told RFID Journal. “The customer base is increasingly demanding. ‘I want it. I want to know you have it. I want to tell you how I want you to get it to me. And I want to do that right now.’ If you don’t have that level of confidence in your data, you have a pretty big problem.”

The department store chain plans to reach full compliance by asking vendors to tag all the products shipped with passive RFID tags. Vendor resistance, which was more pronounced in 2010 when Macy’s began its RFID march in earnest, has largely gone away as costs associated with the technology have come down and results have been proven.

“You find this natural ability to expand and do additional things that have a big impact on sales and profitability,” Mr. Connell told attendees at RFID Journal’s second annual RFID in Retail and Apparel conference earlier this month. “And, I assure you, we track, through control testing and so forth, our performance in these categories quite consistently. We have been quite pleased with the results, both operationally and from a financial perspective.”

Sheldon Reich, vice president of solutions at CYBRA, called the results retailers are seeing from RFID implementation “mind-blowing” in an interview with IT Jungle.

“Once they have the goods tagged in the store, inventory accuracy goes from 63 percent to 95 percent. And by having that increase in the inventory accuracy, the out-of-stocks decline by up to 50 percent. By cutting the out-of-stocks, you increase item availability, and these retailers are seeing sales boosted from two percent to 20 percent because they’re comfortable picking to the last unit,” he said.

DISCUSSION QUESTIONS: In what ways does using RFID help retailers “expand and do additional things that have a big impact on sales and profitability,” as asserted by Macy’s Bill Connell? Is RFID technology the best tool available to retailers that want to gain the inventory visibility needed to execute on the promise of an omnichannel shopping experience?

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16 Comments on "Macy’s to RFID tag everything"


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Mark Ryski
BrainTrust

There are certain technologies all retailers should use and RFID is one of them. Having the right inventory available at the right time is one of the key drivers to conversion, and so it’s no surprise that Macy’s is getting “mind-blowing” results. In the omnichannel world in which we live, tracking the movement of inventory has never been more critical. All retailers need to seriously look at RFID and the potential impact it can have on improving conversion rates and overall results.

Sterling Hawkins
BrainTrust

RFID is probably the best technology to track inventory at an individual level, however, it’s still not quite cost justified for all as of yet — for a shirt or pair of pants the cost is minimal and can make sense; a candy bar is a different story.

Herb Sorensen
BrainTrust
For items costing $10 or more, adding a few cents of electronic identity to the items is not unreasonable. However, robotic scanning of stores began with Google Shelf Scan and now another version is being implemented by COSY. Obviously, RFID can work for electronic product identity, but visual works too, and can track a lot more than item counts, involving the entire structure of the store, including moving displays. In fact, we began with RFID tracking of shoppers in 2001, and have experimented/studied many alternatives since. Now, so many shoppers carry emitting electronic devices, smart phones and the like that those unique MAC addresses are good surrogates for the shoppers themselves. In fact, we have a patent pending on that particular application in the shopper space. That is of course relevant to tracking shoppers, not products. But we have long studied the relation between the two, and machine vision seems to have advantages over electronic methods. However, for inventory control, and other applications suggested here, RFID may play a major role at the item level… Read more »
Paula Rosenblum
BrainTrust

I am very curious to see what those “numerous things” are. If they are able to read every item in the store without associates walking around with hand-held guns, that becomes a stunning opportunity to cut costs while improving inventory accuracy consistently. Goodbye physical inventory processing!

Ron Margulis
BrainTrust

Answering the second question first — RFID is the best tool now available.

RFID is an exciting development for retailers and their supplier partners, but the real impact of the technology happens when it’s pushed beyond operations-oriented activities like inventory to customer-facing activities like merchandising and check out. That is what’s happening at Macy’s, where the retail clerk will soon be able to ensure they have the right products on the sales floor for the right promotions at the right times. The next step is to have sales clerks armed with mobile units that can tell them what styles/sizes/colors are in stock (or not). Incorporate RFID into the POS system and you’re approaching disruptive technology status.

Bob Amster
BrainTrust

RFID tagging significantly reduces, if not eliminates, the probability of disappointing a customer with an unforeseen stock-out. RFID provides the retailer with the most accurate unit inventory information available today. That can translate into making a customer happy, moving the right amount of product from where it actually is to where it is needed, and to finding inventory that may have been misplaced in a stock room when it should have been on the sales floor, or in a warehouse bin when it should have been in a store. There is nothing better than RFID for inventory accuracy to date. The resistance to implement it so far has been mind-boggling.

Peter Charness
BrainTrust

Technology is a balancing act, particularly in the fashion industry. Yes there are numerous undisputable benefits for accuracy, and it does seem absurd that in today’s world a retailer’s perpetual inventory system can be as inaccurate as many of them are (I mean where does that stock go?). But I think the other side of the equation is paying attention to the systems and processes that support buying and merchandising the right assortments in the first place, and spending on technology in a balanced fashion. RFID on a bad buy helps you record a more accurate markdown, but it doesn’t put any more gross margin on the books or build a more valuable relationship with a customer. Spend some on infrastructure and some more on the softer side.

Adrian Weidmann
BrainTrust

RFID technology is the one single technology that can facilitate and fulfill the expectations and promise of today’s multi-channel retail landscape. I’ve been an advocate of this technology for years and I’m not surprised that Macy’s is committing to tag ALL items. RFID can shrink Big Data into little data that allows 100 percent accuracy and transparency to conduct a consignment business which is exactly what all retail truly is! 100 percent tracking accuracy from manufacturing all the way through to consignment sales. Some noted brands are doing this today and the results and efficiencies for both retailer and brand are in fact stunning. I believe this IS the future of brick-and-mortar retail.

Lee Kent
BrainTrust

Being able to pick to the last unit is huge and that requires RFID. Macy’s implemented that program in January of this year so I am surprised to read this article. They already know the gains of RFID and are totally bought in. I suppose this article is saying that perhaps they had not tagged all categories and items and now they are finishing the job.

RFID is also a first step in moving forward with some IoT and more sophisticated interactions with the consumer. If retailers want to provide an omnichannel experience, RFID is about the best game in town.

For my 2 cents.

Ron X
Guest
2 years 1 month ago

Hopefully Macy’s conducted extensive surveys about customer reactions to this technology. There still are many who do not want RFID to be used in this way. The privacy implications of tagging may concern enough people to hurt Macy’s sales.

Karen McNeely
Guest

Hmmm, no one will argue that the typical POS system is not 100% accurate, but I question where the 63% accuracy rate that Mr. Reich quotes comes from. It seems incredibly low to me, coupled with the fact that it is quoted by a gentleman who wants to sell you RFID systems. I’m certain they make a tangible difference in accuracy; I’m just not sure it’s as mind-blowing as Mr. Reich states.

Adam Silverman
BrainTrust

RFID is one of those technologies that improves operations and bolsters the experience in retail, as well. The barriers of adoption were never about misguided use cases. It’s always been about the cost of the technology to scale it up. It’s not a perfect technology, but that’s OK. It’s a building block for the future, connected products and people to improve service and operations.

Ken Morris
BrainTrust

The obvious benefit of RFID tagging all items is phenomenally better inventory accuracy, which reduces out-of-stocks and increases sales. The other big benefit is the labor savings of eliminating the need to physically count inventory. This time savings will allow retailers, like Macy’s, to focus more of their associates’ time on servicing customers than the administrative task of taking physical inventory.

From an omni-channel perspective, I don’t know how any retailer can effectively execute buy online and pick-up in the store without the help of RFID. It is critical to have real-time, accurate store inventory to make sure the product can be picked and ready for the customer when they come to pick up the item they purchased online. Lack of accurate inventory records, in addition to unrefined in-store processes, was probably a key reason why, according to a post-holiday study, 60% of click-and-collect orders placed on Cyber Monday had problems.

We have been talking about RFID for many years. Maybe now it’s time has come!

Craig Sundstrom
Guest

So we know the technology will be “mind blowing” because the person who sells it tells us so? Uhm…OK. Not to be (overly) cynical here, and I’m certainly not opposed to the move, but I’m a little dubious that Nirvana is right around the corner. Even 100% accuracy doesn’t help (much) if you don’t tag properly, don’t staff adequately or don’t have the right merchandise in the first place — all those little things involved in actually selling something.

Steve Johnson
Guest

RFID will save on labour costs (stock audits, delivery checks, etc), limit out-of-stocks and reduce theft. That’s a great start! For me, the exciting part is that it will act as an enabler for other great retail tech.

I do have a few concerns. Tracking that continues after purchase is likely to upset some shoppers and could be a great tool for burglars. Also, whether or not the system is tamper proof. For example, if someone wanted to mess with the numbers, couldn’t they just plant (hide) a few tags in-store? That said, I’d like to believe this has been considered and mitigated — albeit I’m less certain given how beacon tech was rushed to market.

I definitely think RFID offers advantages and early adopters will benefit from other tech that will multiply the effect. Retailers need to recognise that RFID alone won’t be the end game. It’s the start of the race for how the data is best utilised.

Adam Simon
Guest

The impact of RFID on the consumer in a brave new world of IOT technology is immense and will definitely allow retailers to expand. Assuming that people do not mind the lack of privacy of RFID data (Ron X’s comment) the technology opens up the ability for the consumer to do their own inventory management. The latest Samsung fridge — cost £5,000 — incorporates cameras which tell you what is in your fridge. Imagine if the consumer knew with 100% accuracy what is in his/her fridge and larder. And then take it one step further that the consumer gave access to the retailer to see the same. The Dash button would be a thing of the past!

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Braintrust
"There are certain technologies all retailers should use and RFID is one of them."
"I am very curious to see what those “numerous things” are."
"Answering the second question first — RFID is the best tool now available."

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