RFID Talk Blog

Macy’s expands item level tagging; will tag $8B worth of inventory by Q3 2012

Macy’s has moved to the front of the pack when it comes to retailers deploying item level RFID technology. The giant retailer fired a shot heard around the retailing world on Wednesday when it announced that it will begin to roll out item level tagging at all Macy’s and Bloomingdale’s stores nationwide by Q3 of next year to count size-intensive replenishment goods — items regularly stocked and automatically resupplied as they are sold to customers.

The announcement represents about 30 percent of the company’s sales of $25 billion, meaning that Macy’s will tag approximately $8 billion worth of inventory. Additionally, Macys will use RFID to precisely track replenishment goods on-hand by size, color and style at all stores by the fall of 2013. Macy’s move is likely to push tens of millions of tags – probably more — into the retail supply chain.

The initial 2012 launch of RFID will include size-intensive replenishment categories such as men’s furnishings, intimate apparel, men’s slacks, denim and women’s shoes in all stores nationwide. Macy’s and Bloomingdale’s private brands are included in the initiative. All SKUs will be included by fall of 2013.

The announcement is expected to be a watershed moment as retailer’s move quickly to adopt item level tagging to improve supply chain visibility and increase sales by keeping more products on store shelves. At least a half dozen other major retailers are rapidly piloting and deploying RFID in stealth mode. Bill Hardgrave, Dean of the School of Business at Auburn University and a well-known RFID researcher, expects those companies to reveal their plans early next year.

“We’re seeing tremendous activity by retailers operating in stealth mode, and the Macy’s announcement shows that they have a plan to be in every store and that this is happening now,” says Hardgrave. “Walmart is in every store, and Macy’s will be soon. This is a very public announcement by a very high quality retailer and it shows their commitment to the technology, which is phenomenal for the industry.”

In July, RFID 24-7 reported that Macy’s had expanded RFID to 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,” Bill Connell, senior vice president of logistics and operations at Macy’s, said at the time. “And we are deployed into six distribution centers for furniture and bedding. We’re quite pleased with the initial results.”

The latest announcement further establishes Macy’s as an item level pioneer, as it will be among the first retailers to implement RFID on a broad national scale. The company has been testing RFID technology for nearly two years in selected Macy’s and Bloomingdale’s stores and distribution centers.

RFID allows Macy’s and Bloomingdale’s store associates to count inventory significantly faster. This will enable multiple counts throughout the year compared with the current practice of taking a physical inventory once a year. Testing has shown that, on average, inventory accuracy can be maintained at 97 percent or better, a huge leap from the 65 percent inventory accuracy that is typical for most retailers. Frequent counts will also ensure the correct placement of items in the right range of sizes, colors and styles on the selling floor.

“To Macy’s and Bloomingdale’s, RFID is a tool to better serve customers and drive sales by ensuring we have the right product in the right place at the right time for our in-store and omnichannel shoppers,” Tom Cole, chief administrative officer of Macy’s, said in a release. “RFID will allow us to more frequently count item-level inventory with precision so our inventory is readily accessible to our customers. This is technology that has proven effective in our testing, and we believe now is the right time to roll out RFID aggressively.”

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