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Platt Retail Institute Finds RFID-Based Inventory Accuracy, Sales and Satisfaction Gains at Macy's

The study, undertaken during the past 15 months, found that the retailer not only improved its on-shelf and display compliance, but made single-unit sales possible when a store's inventory may be down to its last unit for a particular SKU.
By Claire Swedberg
Jan 20, 2017

The use of radio frequency identification technology at Macy's stores has boosted the global retailer's rate of on-shelf display compliance and overall inventory accuracy, while also lifting customer satisfaction and enhancing omnichannel fulfillment based on in-store, single-unit accuracy. That was the finding of a report released by The Platt Retail Institute (PRI), developed in cooperation with the Northwestern Retail Analytics Council (RAC).

But those findings are just the beginning, says Steven Keith Platt, the Platt Retail Institute's director and research fellow and RAC's research director. According to Platt, the technology offers retailers such as Macy's the opportunity to conduct a wide variety of analytics based on product tag reads, including better management of fitting rooms, determining best merchandise placement techniques, and managing pricing and trends predictions.

Steven Keith Platt
PRI's working paper, the research for which took about 15 months to complete, quantifies the benefits of RFID data for Macy's. The researchers tracked Macy's technology implementation results in four use cases. These consisted of RFID's use with display items in the women's shoes departments across all of Macy's U.S. stores, the overall inventory accuracy as measured by the gross unit variance (GUV) averages from 2013 to 2015, single unit fulfillment for omnichannel or in-store sales and, finally, back-room to store-front replenishment (see Macy's Launches Pick to the Last Unit Program for Omnichannel Sales, Macy's Expands RFID and Beacon Deployments and Macy's to RFID-Tag 100 Percent of Items).

The Platt Retail Institute is an international research company that focuses on technology's use and impact on the customer experience, while RAC is a consumer shopping behavior-based research organization consisting of researchers from PRI and Northwestern University. PRI launched the research not only to present detailed findings regarding the use of RFID in the retail environment, but also to demonstrate how RFID-generated data can be integrated with other information managed by a store to provide greater business insights.

"We found that the value of RFID data is already high, but when you start to use it in other applications, the value rises even further," Platt says. "RFID is such a rich source of information—the benefits go way beyond the supply chain or inventory management."

Case one of the four-case study found that when it comes to display compliance in women's footwear, the use of RFID brought the rate of errors (incidents of available shoes not being displayed on shelves) down. Macy's carries more than 250,000 stock-keeping units (SKUs) of women's shoes, and a typical shoe department features about 800 different styles. The high volume of styles can lead to a lack of compliance in terms of displaying each style for customers.

Prior to the RFID deployment, the rate of errors (non-displayed shoes) was 30 percent. With the RFID system in place, the research indicates, that noncompliance was reduced to between 4 and 6 percent. Customer satisfaction was also higher than in other store departments, presumably due to the women's shoes department's greater display compliance—more products are on the shelf where customers can see them.

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