Although RFID tagging isn’t exactly a new concept, Macy’s was one of the first retailers to make a significant commitment to the technology when it decided to tag 100% of its merchandise with RFID by the end of 2017. To prepare, the retailer asked all of its product vendors to supply merchandise already fitted with passive ultrahigh-frequency (UHF) RFID tags.
The results of the rollout have produced strong results for the department store so far, according to a survey from the Platt Retail Institute:
While Macy’s accumulated inventory accuracy variance of 4%-5% monthly before implementing RFID and monthly cycle counts, the variance decreased to 2%-4.5% with regular RFID cycle counts;
Inventory markdowns decreased;
Display compliance improved within the Women’s Shoe Department (WSD): The rate of items not being displayed after implementation of RFID was in the 4%-6% range, versus a self-reported rate of 30% prior to the implementation;
Full-price sales increased 2.6% within the WSD after the first markdown during the post-RFID deployment period (measured against the comparable non-deployment period); and
The ability to fill orders of RFID-enabled merchandise was 6.1% more than for non-enabled merchandise.
In addition, using RFID on every single unit of selected store merchandise available for sale resulted in quantifiable increases in sales, units picked and order fulfillment rates at test locations. This is critically important for Macy’s as nearly 20% of the company’s in-store merchandise exists as single units.
With this in mind, item-level RFID data is vital information that must be accessible if retailers want to provide accurate inventory insight to their customers.
“Typically, power users of RFID are in the high-90s most of the time when it comes to inventory accuracy,” said Ned McCauley, Director of Retail Strategic Accounts and Inventory Intelligence at Tyco Retail Solutions. “They’re capturing incremental sales because of all the problems they avoid such as out-of-stocks and missed marks. That correlation between inventory distortion and sales improvement is becoming a lot clearer.”
Order Fulfillment Tops RFID Wish List
When it comes to implementing RFID platforms, retailers have significant challenges they specifically want to tackle, according to the Kurt Salmon RFID In Retail Study 2016:
55%: Offer more order fulfillment options to shoppers;
45%: Improve promotion accuracy and personalized marketing;
33%: Gain better inventory visibility; and
30%: Increase operating profits.
With so many retailers seeking more convenient, efficient fulfillment options, RFID implementation becomes even more of a necessity. Brands must track their merchandise not just for consumers, but for employees looking to find these products.
“As retailers leverage their stores to fulfill online demands, the question becomes ‘What is your fill rate?’” McCauley said. “When an order hits the store, you might get 100 orders in a day or 1,000, and the store personnel is then tasked with finding that specific item from the sales floor and bringing it back to the pick-and-pack area that ships it. If you cannot find that item, we call that a pick decline, and the relationship between pick declines and inventory accuracy is pretty close. If you have 60% accurate inventories and you’re using stores to fulfill online orders, your pick declines are going to be close to 40%.”
With enhanced inventory accuracy, the number of shoppers who can find the specific product they want can increase sales by as much as 25%, according to the Kurt Salmon study.