Over the past few weeks, we’ve been discussing Radio Frequency Identification (RFID) and how it benefits omnichannel. This week, we will explore a real world application. Here’s the retail poster child for RFID: Macy’s.
Macy’s is one of the top omnichannel retailers in the US. Founded in New York in 1958, they are now over 800 locations across the nation. The department store sells a variety of items in physical and eCommerce stores. What can you find at Macy’s? To list a few, clothing, accessories, furniture, and jewelry. However, managing inventory can be a challenge even with only a few SKU’s. So how does Macy’s do it so well with so many? For them, a large part of their success depends on their ability to manage inventory effectively.
In 2008, Macy’s began testing RFID on a small scale. After some research, the plan was to implement RFID in their SoHo location. They tagged SKUs for commonly replenished items. For example, shoes, slacks, and denim. Placed by suppliers, these tags could be used to track items within the supply chain and in-store. The store was equipped with mobile devices and scanners that could easily view and update inventory data. After Macy’s saw success in this location, they rolled out the pilot project to seven distribution centers and six stores.
Through RFID, Macy’s was gaining a higher level of visibility. This greatly helped them to meet omnichannel demand. “A lot of the growth is coming from omnichannel,” explained Karen Hoguet, Macy’s CFO. “And we are going to keep investing in all of these technologies and all of these different ways of doing transactions.” They knew they had to stay on the cutting edge of technology in order to remain a successful in their industry.In 2011, Macy’s decided to roll out a full RFID strategy.
Macy’s quickly became known as the poster child for RFID in the retail industry. By tagging on an item level, Macy’s was able to gain greater visibility. This visibility was not only in their supply chain as a whole, but also at a store level. They could monitor stock levels more frequently to increase their accuracy. As a result, Macy’s could prevent stock-outs and more dynamically meet customer demand. It wasn’t long before the company saw an increase in their overall sales and revenues. With this success, Macy’s proves that RFID can ensure inventory counts that are real-time and accurate.”
What’s next?
After seeing such great success, Macy’s has begun expanding their efforts. One of the projects at the top of their list is to expand tagging to fashion items. After the initial roll out, they discovered the benefit RFID can have on an individual store performance. They plan to use fashion item tagging to track what items are on the sales floor. As a result, this will ensure all items make it out before the sale prices set in to eliminate out-of-season fashion. This will help the company capitalize on all sources of revenue in an effective manner.
In addition, Macy’s has started looking into iBeacon tech. Combining beacon and RFID tech, Macy’s hopes to give customers a highly interactive and seamless experience. Imagine as you are walking through Macy’s you receive personalized promotions and discount codes right to your phone. You can use this on items in the department you happen to be in. This is still in the development phase for Macy’s. However, the effect it will have on the customer shopping experience is remarkable.
Using RFID is a great way to increase visibility, accuracy, and revenue. Macy’s is a perfect example of success with RFID technology. However, it can be quite a large project. Is RFID right for you? Be sure to research the topic and look into service providers that can assist you with the transition. For more info on RFID, be sure to check out our earlier blog posts and stay tuned for updates in this series.
