IDC Retail Insights Sees Competitive Impact From Macy’s Use of RFID

Analyst Leslie Hand says RFID will "help brick-and-mortar retailers compete in the face of major industry transformation," and that retailers should expect their competitors to begin using the technology soon.
Published: October 11, 2011

Leslie Hand, formerly a retail executive and now an analyst for IDC Retail Insights, has been watching radio frequency identification for the past few years. In a recent article, titled “The Competitive Impact of Macy’s RFID Roll-out,” Hand writes that Macy’s competitors should be concerned that the firm is accelerating its RFID rollout plans (see Macy’s Inc. to Begin Item-Level Tagging in 850 Stores).

Hand says competitors should be concerned, because research suggests that Macy’s will be able to improve its inventory accuracy by 30 percent, reduce out-of-stocks by 50 percent and decrease the time required for workers to perform cycle counts by 96 percent, thereby enabling more frequent cycle counting without increasing labor costs.

“If [Macy’s] can accomplish these improvements in key fast-moving categories, competitors will struggle to have the in-stock performance Macy’s has, and these competitors will see increasing customer attrition, as customers discover that the shopping trips to Macy’s are more productive,” Hand writes. “Of course, Macy’s competitors could also increase inventories to improve in-stock positions, but this will certainly not improve business health.”

The reality is, of course, that even adding additional stock within a store does not guarantee that the products will be in the correct place at the right time. RFID can provide alerts to ensure that goods are always on the shelf when customers want to buy them.

Hand concludes her compelling article by saying, “IDC Retail Insights recognizes the financial and resource commitment that retailers make to implement RFID in their enterprises, but we believe that RFID will help brick-and-mortar retailers compete in the face of major industry transformation. Expect your competitors to implement this technology in the next three to five years. Within five years, cheaper printed electronic tags will be introduced, revolutionizing the cost-benefit scenarios, making RFID a smart choice for a much broader range of products and retailers.”

Macy’s is making the right move, and while technology doesn’t provide a permanent competitive advantage, if the retailer continues to invest and innovate, it will be able to stay a step ahead of its competitors.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark’s opinions, visit the RFID Journal Blog, the Editor’s Note archive or RFID Connect.