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Macy's Inc. to Begin Item-Level Tagging in 850 Stores

The company plans to RFID-enable its Macy's and Bloomingdale's stores in 2012, and will tag garments most often replenished—accounting for about 30 percent of the retailer's sales.
By Claire Swedberg
Sep 28, 2011By late 2012, all Macy's and Bloomingdale's locations will be equipped with radio frequency identification technology, in order to read item-level tags on garments and personal items sold at the stores. Macy's Inc., the company that owns both brands, announced today that its rollout of item-level ultrahigh-frequency (UHF) Gen 2 RFID tags for inventory tracking was the result of successful pilots of the technology conducted over the past several years, at a handful of East Coast stores and furniture and bedding distribution centers. Macy's Inc. operates 810 Macy's department stores throughout 45 U.S. states, as well as in the District of Columbia, Guam and Puerto Rico, and 41 Bloomingdale's stores across 12 states.

Since late 2008, the company has been testing RFID technology by reading tags on garments, according to Bill Connell, Macy's Inc.'s senior VP of logistics and operations. Initially, he says, the technology was tested at a Bloomingdale's location in New York City's SoHo neighborhood, at which time the store's inventory speed and accuracy were compared against those of another control store at which no RFID tags were applied (see Bloomingdale's Tests Item-Level RFID). The pilot was then expanded to include seven additional stores and six distribution centers. According to the company, the testing found that inventory accuracy—knowing which goods were located at which specific spot—was raised to 97 percent thanks to the item-level application of RFID tags, as well as the reading of those tags for inventory cycle counts, both within stores and at DCs.

With the permanent rollout of RFID at all Macy's and Bloomingdale's stores, suppliers will be asked to apply passive UHF tags to "replenishment items"—products regularly stocked, and automatically resupplied when sold to customers, and accounting forapproximately 30 percent of Macy's Inc.'s sales. The items to be tagged will consist of size-intensive replenishment categories, such as men's and women's undergarments, men's slacks, denim apparel and women's shoes.

The retailer predicts that RFID will enable employees at all of its stores to conduct inventory counts faster, thereby allowing for inventory to be carried out more frequently throughout the year. In the past, inventory counts were performed only once annually. The use of RFID within stores, Connell says, enables inventory counts for tagged items to be taken several times a month. With the more frequent counts, he explains, the company hopes that there will be fewer instances of out-of-stocks on store shelves, which should also lead to increased sales revenue.

The deployment will consist of handheld RFID readers for store workers to use in back rooms or on the sales floor, in order to periodically count inventory levels. Software will store data, including each tag's Electronic Product Code (EPC) number, as well as the corresponding item's stock-keeping unit (SKU) data. RFID handhelds could also be utilized at all store distribution centers.

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