Macy’s Expands RFID and Beacon Deployments

By Claire Swedberg

The retailer has begun tagging fashion garments at its Macy's and Bloomingdale's stores, to help make sure the merchandise is on the sales floor and to reduce the need for markdowns.

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Macy’s and Bloomingdale’s vendors have begun tagging fashion items, such as social dresses and men’s jackets, for all of the retailer’s stores. The RFID rollout, for item-level inventory tracking, follows initial piloting of RFID for fashion apparel at several of Macy’s stores within the United States (see Macy’s Inc. to Begin Item-Level Tagging in 850 Stores and RFID a ‘Very Big Part of Macy’s Future’). Macy’s Inc. operates both Macy’s and Bloomingdale’s stores.

In addition to expanding its use of passive EPC ultrahigh-frequency (UHF) RFID tags, Macy’s Inc. is also building out its deployment of Shopkick Bluetooth Low Energy (BLE) beacons, to include multiple departments in all stores. This will enable a shopper who opts in to receive discount coupons and rewards within a store, based on his or her location (see Macy’s Tests Shopkick’s ShopBeacon at New York, San Francisco Stores). During this expansion, says Jim Sluzewski, Macy’s Inc.’s senior VP of corporate communications and external affairs, the company is installing a total of approximately 4,000 beacons, with plans to have them taken live in the next few months.

Macy’s will begin offering more focused messages to Shopkick users. As shoppers enter the handbag department, for example, they might be offered a discount on a specific bag.

“We’ve been on a journey with RFID for the last few years in our stores,” Sluzewski says. That journey has included attaching passive UHF tags to basic, frequently replenished items, such as men’s dress shirts, as well as to footwear on display within the stores’ shoe departments, in order to ensure that all merchandise are displayed at any given time. The value of tagging men’s shirts and other basic items was in the ability to better ensure that store inventory remained up to date, and that goods were ordered for replenishment when needed.

The retailer had not focused on faster-changing categories, such as fashion items, according to Sluzewski, because they are often not replenished at all. Generally, soon after such merchandise is received at the store, it is placed on the sales floor, where it remains for up to eight to 10 weeks until the inventory is depleted. Any garments remaining after that period are marked down in price.

During the past spring and summer, however, Macy’s Inc. has been considering (and testing) a change to that strategy, and has been tagging some of its fashion goods to make sure all items are on the sales floor, where customers can view them. Tags were interrogated in the back room as apparel was received, and staff members then periodically conducted inventory checks on the sales floor to ensure that nothing had ended up missing. If an order of women’s dresses is received in the back room, for instance, the garments may not all be placed on display at first, due to the store having extra inventory. If high-fashion garments on the sales floor are not replenished when sold, however, some of those items might remain in the stockroom and thus might not be sold during that short eight- to 10-week window of full-price opportunity.

All stores already have handheld EPC UHF RFID readers onsite that employees can use to track inventory in other departments. As such, the pilots involving high-fashion apparel only required the application of tags to those goods and the training of personnel in that department to read the tags.

Sluzewski says the fashion pilots, carried out at several stores that he declines to identify, resulted in a sales lift of those tagged items. What’s more, he reports, the company achieved improved gross margins and a reduction in the quantity of goods requiring markdowns.

Before it can expand the RFID-tagging of fashion items to all of its stores, Macy’s Inc. must wait for its suppliers to tag those garments. The tagging rollout is expected to extend through 2015. The retailer is not recommending specific makes or models of RFID tags to be used by vendors.

Macy’s Inc.’s Jim Sluzewski

In 2013, the company tested Shopkick beacons at two of its stores. If a customer downloaded the Shopkick app, then upon entering a store in which the beacons were installed, that shopper would receive a message prompting him or her to open the app. Upon doing so, the consumer would then receive a promotional message, such as “Receive 20 percent off all items in the store with a Macy’s coupon.”

“It’s been in limited testing, but we found that it’s a [technology] that customers are interested in,” Sluzewski states. “Shoppers are using mobile devices more than ever, and are interested in new applications.”

During the coming months, as additional beacons are installed, Macy’s and Bloomingdale’s intend to begin offering more focused messages to Shopkick users. For example, upon entering the jewelry department, shoppers might receive a promotion indicating a discount on the price of a specific pair of gold hoop earrings.

All of the technology upgrades—which also include a smart fitting room equipped with tablets and bar-code scanning technology—are part of what Macy’s Inc. is calling its omnichannel campaign to make products available to shoppers whenever, wherever and however they want. This includes ensuring that the entire inventory of products is available to customers at any given time.