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Macy’s stellar Q3 traced to RFID and Omnichannel

During an investor and analyst meeting this summer, Macy’s chief omnichannel officer Robert Harrison said that RFID and omnichannel represent “a huge sales driver” for Macy’s.

That is evident in Macy’s third quarter earnings report released this morning. Macy’s stock is soaring after announcing impressive third quarter earnings. Although the retailer didn’t mention RFID technology in its earnings report, Macy’s did tout its Omnichannel retailing strategy as part of the reason for comparable store sales growth of 3.5 percent.

RFID in retail

The Macy's chain, including its Herald Square Flagship store in New York City, is benefitting from the high inventory accuracy provided by RFID.

Omnichannel retailing allows shoppers to order a product online or with a mobile device and to pick it at a nearby store or arrange for quick delivery. A successful Omnichannel strategy is impossible without the use RFID, which allows retailers the high inventory accuracy needed to have the confidence to fulfill orders at the store level. During a conference call with analysts, Macy’s CFO Karen M. Hoguet confirmed that Omnichannel orders are now able to be picked up at 500 stores that have been turned into de facto distribution centers.

Terry J. Lundgren, Macy’s chairman, president and chief executive officer, emphasized the role of Omnichannel in the earnings report: “Our success in the fourth quarter will be driven by a wide selection of exclusive products from the most-wanted brands and designers. We will bring them to our customers, whether they shop in our stores, online, via mobile – or all three.”

Sales in the third quarter of 2013 totaled $6.276 billion, up 3.3 percent from total sales of $6.075 billion in the third quarter of 2012. Hoguet said that women’s apparel items (many of which carry item level RFID tags) contributed strongly to the third quarter sales gains.

In June, Macy’s said that it planned to extend its store-based fulfillment capability to 500 stores this year, powered by the inventory accuracy provided by item level RFID. (Read the RFID 24-7 story here.)

At that time, nearly 50 percent of Macy’s replenishment vendors were committed to deliver RFID-tagged products in the future, and the retailer expected that 10 percent of its total replenishment inventory would carry RFID tags by August.

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