For Retailers, the Times, They Are a-Changin'

Apple and Macy's are adapting to changing conditions created by online retailers and more demanding customers, but RFID will be needed for retailers to truly compete.

By Mark Roberti

Tags: Apparel, Asset Tracking, Consumer Packaged Goods, Innovation, Inventory / Warehouse Management, IT/Infrastructure, Operations, Payment Systems, Retail, Supply Chain

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Nov 07, 2011—Last week, I wanted to purchase a 500 GB portable hard drive, in order to store PowerPoint files and video recordings of presentations for use on the road. I also needed a new case for the Apple iPhone 4S that I ordered a week prior. I did a quick Web search, and found a recommendation for a good protective case, then visited CNET for reviews of hard drives, clicked on Amazon.com and ordered both items. Total elapsed time: 10 minutes.

I'm not alone in turning to the Web for many of my purchases. While online purchases account for only 4 percent of all sales, they are growing far faster than in-store sales. In the United States, retail sales rose by 4.5 percent during the third quarter of this year, while Web-based retailers saw a 14 percent jump (sales through Amazon.com's Marketplace rose by a whopping 37 percent). In the United Kingdom, the difference was even more pronounced: Online sales rose by 15 percent in September, compared to an anemic 0.3 percent increase in stores.

Some retailers are responding. Last week, Macy's announced plans for a $400 million redesign of its Herald Square store, adding new luxury retailers, a brew pub, a sit-down restaurant with views of the Empire State Building, and what it claims is the world's largest women's shoe department. Macy's understands that to draw people into its stores, shopping must become an experience. The second floor will contain 39,000 feet of space, offering what the company calls "an unequalled assortment of fashion and luxury footwear."

To help ensure that shoppers will be able to find what they wish to buy, Macy's recently announced plans to employ radio frequency identification to track unique apparel items (see Macy's Inc. to Begin Item-Level Tagging in 850 Stores). Store executives have publicly stated that all conventional retailers need to be as good at having the right merchandise on the sales floor as they are at delivering items purchased online—and that RFID is the key to making this happen. Macy's did not indicate whether it plans to employ RFID to help shoppers locate the 300,000 pairs of shoes that will be available for sale, though it did report that it intends to include interactive store directories, a "shoe-locator system" and a mobile application.

Lord & Taylor recently announced that it is utilizing an RFID solution as well, to ensure that customers can see every shoe style it sells. See Lord & Taylor Tags Shoes, Boosts Sales.

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For Retailers, the Times, They Are a-Changin'

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