StorefrontBacktalk: Macy’s Won’t Make Its RFID Move Until Everyone Else Does

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Aug 10, 2011
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Through a special arrangement, presented here for discussion is a summary of a current article from StorefrontBacktalk, a site tracking retail technology, e-commerce and mobile commerce.

Macy’s is quickly moving ahead with its RFID item-level tagging efforts but is also indicating that significant additional moves will only happen when key competing retailers make their item-level RFID moves. It seems that the $25 billion chain has figured out the difference between being an industry leader and leading an army of one.

An article in RFID 24-7 indicated that Macy’s trial’s goals are focusing on improving cycle counts and maintaining physical inventory accuracy. Bill Connell, Macy’s senior vice president of logistics and operations, was quoted, “We are in the process of evaluating the use of RFID specifically as it relates to replenishment for our apparel and footwear business. And we are deployed into six distribution centers for furniture and bedding. We’re quite pleased with the initial results.”

But Mr. Connell’s next thought, about industry cooperation, was more telling.

“We have stated that as part of the RFID Initiative, we have an eye toward industry adoption by mid-2012 and we fully expect to be an early mover along that timeline. Industry adoption means everybody agreeing to do it, and once that is agreed to, we intend to be an early mover,” Mr. Connell said.

There’s nothing quite as enjoyable in the middle of summer as a nice bit of retail arm- twisting. In this instance, though, it’s absolutely appropriate. Walmart — with its Sam’s Club division — tried going the RFID route alone and discovered that even the world’s largest retailer can only do so much on its own.

Unfortunately, everyone is testing RFID in very different ways. For standardization, which is what suppliers need and what Macy’s is insisting on, that’s bad news. Staples is trying to bring the per-tag cost way down with a re-usable tag approach, while J.C. Penney is focusing solely on high-end products (no last-mile supply-chain checking) and Walmart itself is now freaking out privacy experts by allowing customers to leave its stores carrying fully activated tags, hoping that the customer will later throw them out.

This means that Macy’s is pressuring for both RFID item-level adoption and consistency in its adoption among a wide range of retailers. This is very good for the industry, but it’s a very clever move by Macy’s. First, it takes the pressure off of the chain for rapid deployment — despite the one-year self-proclaimed target — and doesn’t force Macy’s to move any faster (or to invest precious IT funds any faster) than its rivals. It, therefore, is minimizing the ever-popular leader penalty.

Second, it gets Macy’s out of the awkward threats against suppliers. If the industry doesn’t move, there are no threats. And if the industry does move, the supplier anger is diluted because it’s directed at lots of retailers.

Every once in a while, Macy’s reminds us how standards should happen.

Discussion Questions: What do you think of Macy’s approach to its RFID trials and rollout as well as vendor compliance? Is this the path to drive standardization?

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11 Comments on "StorefrontBacktalk: Macy’s Won’t Make Its RFID Move Until Everyone Else Does"


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Paula Rosenblum
Guest
9 years 8 months ago
I have been often called “Negative Nancy” when it comes to my opinions about RFID. I guess it’s a good time to express my point of view once again. 1) RFID in the supply chain is mostly a solution looking for a problem. Code 128 license plates do a fine job on cases and pallets, and the liquid and metal “physics problem” make the “no line of sight” issue moot. 2) Item level RFID on apparel and footwear is very interesting. RF-EAS tags can provide a dual purpose. BUT…I believe the gating factor to adoption is the cost of READERS, not tags. I believe the benefits are muted if you cannot get full store coverage. You still get some benefit, but not full benefit. 3) Ditto with item level RFID on general merchandise, except we run into a “metal problem” – we lose the “no line of sight” opportunity again. 4) I also don’t think it’s so much about “supplier angst.” In fact, applying RFID tags to garments is a lot easier than it used… Read more »
Fabien Tiburce
Guest
Fabien Tiburce
9 years 8 months ago

This reminds of the difficulty it took the BlueTooth specification to work seamlessly and universally across devices. Early attempts were plagued by driver problems; incompatibilities which made the technology great in theory but a headache in practice. RFID will probably get there but the onus is on manufacturers and vendors to nail the standard first.

Roger Saunders
Guest
9 years 8 months ago

Like Universal Product Codes that we all adjusted to some 30+ years ago, RFID needs retailers and manufacturers working together to bridge to consumers. UPC had detractors and skeptics as they evolved in the marketplace.

And, RFID (certainly the technology has been around for a number of years), will gain acceptance by the triangle of retailers/manufacturers/consumers — provided they work together in the understanding of driving efficiencies and cost-savings into the supply, distribution, and purchase phases.

Marge Laney
Guest
9 years 8 months ago

This is news? Many retailers make sheep look like rugged individualists. Early adopters don’t have a big impact on other retailers in most cases. Many retailers take the stand that they “have a very special business and are not a normal retailer,” which is preposterous. Hesitancy to adopt new paradigms has its root in the desire to maintain the status quo, even in the face of a better more profitable solution. RFID, unfortunately, has a long row of beans to hoe before making a significant move into item level adoption in retail.

Ryan Mathews
Guest
9 years 8 months ago

Maybe it is, maybe it isn’t.

So far there hasn’t been a big payoff on being a retail RFID leader, but hope does seem to spring eternal.

I think they are right to back off their initial targets. Better to lose a little face than millions of ill-spent IT dollars.

Camille P. Schuster, PhD.
Guest
9 years 8 months ago

This is not significantly different from what Walmart tried to do in their industry. The same issues apply. First, standardization of signals, readers, and codes is critical. Without that, the expense is too high and there will not be widespread use. Second, there is a point at which enough manufacturers and retailers need to be using the standardized system to reach the tipping point. Until that happens, the cost savings claims do not really hold up. This is an initiative that one company can champion but not make happen.

Bill Bittner
Guest
Bill Bittner
9 years 8 months ago
I attended the Macy’s discussion at the NRF show in January and their reported results still amaze me. The improvement in apparel inventory accuracy was astounding. After making some in-store observations I came to the conclusion that the reason apparel book inventories are so inaccurate is likely because of all the recounts. It is like the Heisenberg uncertainty principle of quantum physics; the closer you observe the physical inventory the less certain you become of its correct value. Because the observers are not accurately distinguishing the various sizes of the apparel merchandise, the more observations they make the less accurate the inventory becomes. In a test environment where you are taking frequent inventories to compare RFID tagged items to non-RFID, you increase the inaccuracy of the non-tagged inventory. Yes RFID improves accuracy, but the original base line error rate was artificial. As much as we talk about RFID, the simple fact is that it is still too expensive for most retail supply chain situations. If by now we have not learned anything else about the… Read more »
M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
9 years 8 months ago
Don’t you love statements like “Walmart – is now freaking out privacy experts?” And we wondered where the fun went in retailing. Shame on us. RFID provides and will continue to provide fun for years to come. I was part of the UPC development about four decades ago when the original design was a bullseye rather than a bar, and it took more than thirty years for every product in a supermarket to comply. Imported and random weight items were the worst, and we still say “UPC code” even though that means “Universal Product Code code.” Some things take time and some things never change, like our affection for the term “PIN number,” which really means “Personal Identification Number number.” Today there’s the Aztec barcode system, which is gaining acceptance through its compatibility with cellphone readers and the accompanying use for special promotions. It’s very cool. And then there’s RFID. How can it be made to work with cellphones to support the soi-disant “revolution” in in-store shopping aids for discerning consumers? And can cellphones be… Read more »
W. Frank Dell II
Guest
9 years 8 months ago

The bigger the retailer, the more they want the industry standard to be their way. Macy’s item price point is higher than the typical supermarket item. Therefore, the RFID tag and control has greater benefit. A good RFID system can replace their current item security system; for instance, for fur coats.

The RFID power is in having every item in the store tagged, not just higher value ones. Standards are important, but there needs to be variations for different types of retailers. Simply, all tags need to be de-activated at sales time.

As we have said all along, until the usage increases, the cost will not be driven down for wider acceptance. Think of it as the power circle for RFID tags.

Cathy Hotka
Guest
9 years 8 months ago

Don’t be distracted by stories like this. RFID is a freight train, the major retailers are on it, and the potential increase in profits from being able to conduct monthly inventories is ENORMOUS. Big retailers will ignore item-level RFID at their peril.

Joe Andraski
Guest
Joe Andraski
9 years 8 months ago
First and foremost, the members of the VICS Item Level RFID Initiative, (VILRI) which include many of the largest retailers and brands in the world, are confident our effort will have a major impact on the broad scale adoption of the Initiative. The initial research into item level RFID conducted by the University of Arkansas clearly proved the business case for both suppliers and retailers by reporting increased sales and inventory accuracy, improved order fill and greater productivity. These results have prompted phase II of the Initiative, which is intended to drive widespread adoption of item level RFID and the EPC standards through a combination of continued testing of item level RFID systems, development of best practices for retailers and suppliers and promotion of the technology with industry influencers. From my perspective, it is exciting to experience the industry coming together in one of the, most important initiative of its kind in the history of the retail channel. Technology gains are concurrently taking place that will reduce the cost of doing business, while enhancing the… Read more »
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