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NRF Day 1 Update: RFID drives retail sales and profitability

There was a strong message delivered to retailers during a panel discussion on RFID at NRF’s 104th annual Big Show on Monday. The use of RFID is the new normal within retail, and retailers that don’t embrace the technology beyond the foundational use cases like inventory accuracy and out-of-stocks may be left behind.

“You won’t gain a competitive advantage just from using RFID for inventory accuracy, out-of-stocks, locating product and loss detection,” says RFID expert Bill Hardgrave, the Dean of the Harbert College of Business at Auburn University. “It’s what you do above and beyond that, the secondary use cases, that will really benefit retailers.”

Hardgrave and Pam Sweeney, senior vice president of logistics systems at Macy’s, drilled home the point that RFID drives sales gains and profitability.

“We do see sales improvement in RFID-tagged categories as well as margin improvement,” says Sweeney. “We are very confident that the technology works and our store execution is flawless.”

Hardgrave says that when RFID is deployed correctly, sales gains follow. “When it comes to an uplift in sales, it depends on the retailer,” he says. “We’ve seen anything from 2 percent to greater than 30 percent. It all depends on where you are starting from and what categories you deploy with. But we’ve yet to see an instance where sales did not go up when RFID is deployed properly.”

The panel was sponsored by Avery Dennison Retail Branding and Information Solutions (RBIS). During the panel, Joseph Granato, director of global initiatives at lululemon athletica, revealed that the specialty apparel retailer is piloting RFID at 13 stores. Initial pilots began two years ago.

“We have guests coming in to look for a very specific product,” says Granato. “They are looking for a very specific piece of clothing that they absolutely want, and RFID will support us in eliminating the pain points that we have today in finding the exact product. We see that as a definite win.”

Sweeney and Hardgrave say that several things need to happen for accelerated adoption to occur. Most importantly, more suppliers need to apply tags at the point of manufacture. In addition, retailers need to talk about their experiences to educate and collaborate others.

“Our goal now is to continue to get more of our suppliers on EPC,” says Sweeney. “We need our suppliers to start source tagging; without that, they will be less competitive than those who are tagging. That’s why we’re out talking about this in the industry. Our fashion vendors are coming to us now (about tagging). It has taken off to be a foundational element to drive our omni-channel sales initiative.”

Hardgrave says that over the course of the last year, some apparel vendors began tagging all of the items they manufacture, regardless of whether retailers demanded it.

“Last year was the first time I saw that,” says Hardgrave, who had requests to meet with several retailers in New York who have not yet engaged with RFID, but are anxious to learn more. “There were some brand owners that started to tag everything, and that drove some retailers to start pilots because that product was flowing in to their distribution centers.”

While RFID is being incorporated into pricing tags in many U.S. applications, retailers in Europe are starting to see more RFID tags sewn into the garment. “That’s really where the tag should be,” says Hardgrave. “A lot of good can come from the tag being embedded. It helps with LP, it helps with returns and in a lot of other aspects.”

Although Sweeney didn’t reveal any new timetables for deploying, she noted that Macy’s now has high enough confidence in its inventory to expose its last units, something that is crucial to omni-channel efforts. “We’ve been able to take this to those secondary use cases,” she says. “We’re now looking at fashion categories. The only category that we don’t have plans for are those that are still difficult to read with the technology, like cosmetics and fragrances. But we couldn’t be positioned any better for omni-channel.”

“Ultimately,” says Hardgrave,“ if you want to be an omni-channel retailer you can’t do it without RFID. You must know what you have and where you have it.”

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