Dillard's Gears Up for Item-Level Pilot

With its third and current trial, the first phase of which has already begun, Dillard's is studying the movement of denim jeans through the supply chain. The two-phase pilot is expected to run until January 2008.

This first phase of the test involves the tagging of cases for five jean styles, explained Chuck Lasley, manager of purchasing and receiving applications for Dillard's. The cases are being tagged at the manufacturer's service center and sent to a Dillard's store in Dallas. Soon, the contents of the cases will also be tagged and, in addition to reading the case label (which the retailer is currently doing) upon receipt at the store, Dillard's will read each item's RFID tag, as well as its bar code label. Dillard's plans to compare the unique tag ID numbers encoded to the case and item tags with the item bar code label and the advance ship notices that the manufacturer sends, in order to compare the accuracy and thoroughness of the RFID and bar code data-capture processes. The retailer will also perform daily cycle counts in the pilot store and compare the data captured against its legacy inventory counts to see if RFID provides greater accuracy.

An important distinction between this trial and its previous tests of the technology is that for the denim-tracking test, tags will be attached to garments that Dillard's customers will be able to try on and buy. Because of this, Holder explained, Dillard's will launch a campaign to make its customers aware, through signage and other means of communication, that RFID is being used in the store involved in the trial. Holder says that Dillard's may also begin mailing printed information about RFID and how the retailer is using it. This information could be inserted in the envelopes containing the credit card bills sent to Dillard's cardholders.

"There's no retailer out there who isn't concerned with consumer privacy issues," said Holder, "and Dillard's certainly is." Dillard's, he explained, will approach any concerns brought to the store by privacy advocates by being upfront about how the retailer is using the technology and ensure them that the tags will be removed at the point of purchase and not used for tracking consumers outside the store.

Holder says Dillard's has a number of additional RFID pilot projects scheduled, through 2009, and believes that it will begin attaching tags to its own private-label merchandise. "We think that there will be a big bang for our buck in source-tagging private-label goods," he said.