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Macy's Launches Pick to the Last Unit Program for Omnichannel Sales

As a result of its confidence in its RFID-based inventory data, the retailer is now selling products down to the final unit in stock at its stores.
By Claire Swedberg
Jan 26, 2016

Macy's has taken live a new program that employs radio frequency identification to allow omnichannel fulfillment of consumer purchases, right down to its last available unit of in-store merchandise. The program, which Macy's has named Pick to the Last Unit (P2LU), enables the retailer to list goods for sale online even when there is only one such item available at the store. In the past, inventory counts were simply not precise enough to ensure that a unit of a particular product was actually in stock and available for sale. However, Macy's says it has proven that by using RFID technology to perform inventory counts, it can be certain of what it has available and can, therefore, put it up for sale. The RFID system is provided by Tyco Retail Solutions, using that technology company's TrueVUE RFID Inventory Visibility software platform to capture inventory data.

When products are sold down to just one or two items of a specific size or color, they are traditionally put on a sales rack at a reduced price; in the case of online sales, they typically aren't listed at all. That's because even if one size of a particular stock-keeping unit (SKU) is down to its last item at a store within a shopper's vicinity, there is too high a risk that the garment isn't actually in stock and available for sale. Between 15 and 20 percent of inventory falls in the "last unit" category, Macy's reported to Tyco. Therefore, a large percentage of goods, especially in the popular fashion category, cannot be sold online. That made a program such as P2LU a good idea, says Kim Warne, Tyco's global marketing director.

Kim Warne, Tyco's global marketing director
Macy's, which declined to respond to requests for comment, has been using RFID technology for inventory management and replenishment for several years (see Macy's Inc. to Begin Item Level Tagging in 850 Stores and Macy's Expands RFID and Beacon Deployments). Its chain-wide deployment for both Macy's and Bloomingdales stores has been underway for approximately three years, Warne says, and each store is equipped with Zebra Technologies MC3190-Z handheld readers, which the sales staff use to conduct sales-floor inventory checks. Initially, the company tagged replenishable basics, such as underwear, men's slacks and, more recently, women's shoes. Many suppliers are attaching RFID tags to the merchandise they ship to Macy's, so goods arrive at stores already tagged.

Macy's has reported that it experienced a 2 to 3 percent inventory degradation (inaccuracy) each month, which could equate to 24 percent by the end of the year. This would make omnichannel sales challenging, especially if only one or two units of a particular product were reported to be located at a store.

During the past year, the company has been looking into the category of fashion apparel, which can pose more challenges than other merchandise. Typically, fashion consists of seasonal items that are stocked in smaller quantities, are sold more quickly and might not be replenished when inventory gets low. Most fashion apparel is now tagged.

The fashion category is also sold through omnichannel means, enabling a consumer to visit Macy's website and purchase goods physically located in a store within the region in which he or she is ordering it. Because Macy's is now using RFID to track those goods, the company resolved to modify its omnichannel program to include products that have been reduced to a single item at any specific store. The retailer spent the past year testing its ability to use the RFID-based data to accurately fulfill online fashion purchases from the last units for sale within women's dresses. It found, based on a year of testing, that online sales increased compared with the year prior. This also meant that the stores selling dresses had fewer marked-down products in the single-item category.

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