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Macy’s updates item level tagging objectives

Within a year, item level tagging is expected to be well on its way to becoming ubiquitous in the retail supply chain. In fact, the VICS Item Level RFID Initiative has set a goal of achieving industry adoption by mid 2012.

Although numerous reports have stated that retailers like Walmart and Macy’s slowed their tagging programs this spring, any delays are expected to be temporary, with little or no impact on overall adoption.

According to VDC Research, Walmart is still expected to consume 800 million RFID tags for its item level program during 2011. And executives at Macy’s dispute claims that they have slowed apparel tagging. In fact, Macy’s has deployed tagging at six distribution centers that handle furniture and bedding goods for the purpose of improving cycle counts and maintaining physical inventory accuracy.

“We are in the process of evaluating the use of RFID specifically as it relates to replenishment for our apparel and footwear business,” says Bill Connell, senior vice president of logistics and operations at Macy’s. “And we are deployed into six distribution centers for furniture and bedding. We’re quite pleased with the initial results.”

Aside from the deployment at its DCs, Macy’s is piloting RFID at multiple stores. In January, RFID 24-7 reported that Macy’s would roll out item level RFID across seven stores and start tagging several product categories, including men’s jeans and women’s lingerie. It’s unclear if Macy’s has kept to that goal or slowed its trial, although Connell says there have been no changes to the initial plan.

“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,” he says. “Industry adoption means everybody agreeing to do it, and once that is agreed to we intend to be an early mover.

“Right now we are running pilots in a relatively small number of stores and that’s all about just understanding what it’s going to take for us to deploy on a large scale from a hardware and software perspective, and from the point of view of the store associate’s use of the technology.”

As a result of a tagging slowdown detected by analysts at VDC Research, the firm downgraded its tag forecasts to 2.1 billion units for 2011 (a 51 percent reduction), and to 40 billion units by 2015, a 10 percent reduction from its original forecasts. However, VDC says that there are more retailers committing to deploying RFID than those experiencing delays. They site JC Penney, Gerry Weber, Hudson Bay and Liverpool as all increasing their investments in RFID and tagging more products.

As for the VICS Item Level RFID Initiative (VILRI), the program recently moved into what it calls Phase II, which will include an increased focus on marketing outreach and education, and the formation of a Solution Providers Council, which technology vendors can join for a fee, and be involved in helping to shape the technology offerings used by retailers.

As previously reported in the RFID 24-7 blog, a group of five vendors (Impinj, Motorola, Checkpoint Systems, Tyco and Avery Dennison) have donated a large portion of the VILRI’s $400,000 operating budget over the next two years.

The new funding will also allow VILRA to launch a new web site this summer and to sponsor roundtable discussions and web casts about the benefits of apparel tagging. The group has also hired Cathy Hotka & Associates, retail branding and technology consultants, to talk up item level tagging to retailers and technology suppliers.

“It’s really a way to begin to move forward with a very active communications outreach and education strategy so that the word gets out and the level of activity continues its pretty remarkable ascendancy over the past 12 months and even more so over the past 6-9 months,” says Macy’s Connell, who is also co-chair of VILRI’s communications committee. “The activity continues to increase and we think this will only serve to support that and continue the upward trend.”

VILRI is currently looking at tag applications and coming up with guidelines for suppliers and retailers. In addition, the group continues to research serialization issues, tag performance and data sharing. The group hopes to publish item level tagging guidelines by early next year.

The ultimate goal remains pushing the tagging process back to the source of manufacture. Currently, most tagging is occurring at the DC, or even at the store level. European retailer Gerry Weber is working aggressively to tag all 28 million products at the source, and U.S. retails execs are pushing for a similar result.

“We’re watching what the industry does very closely,” says Connell. “In order to deploy we need to work closely with trading partners to make sure we are source tagging capable. The level of tagging that is required to achieve what we hope to achieve for industry adoption really does necessitate that suppliers and retailers come together and agree to a solution that involves source tagging.”

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