Myer Achieves Near-100 Percent Inventory Accuracy With RFID

Since deploying a solution from Checkpoint Systems, the Australian retail chain has reduced inventory count times, decreased shrinkage, and boosted sales at its stores and online.
Published: March 19, 2019

Australian Department store Myer has cut its inventory-counting time from hours to minutes, and has reduced shrinkage of high-value electronics merchandise, with an RFID solution that tracks goods as they are received and sold at five of its stores. The technology, provided by Checkpoint Systems, was piloted at one store with a single brand of electronics. It was then expanded to more locations, once the company determined that the technology reduced inventory-counting times from more than two hours to less than five minutes, and provided nearly 100 inventory accuracy.

The pilot took place last year at the company’s flagship store in Melbourne. One category of electronics brand was tagged when products were received at the store. Those items were counted during scheduled inventories with RFID readers, then their tags were read a final time via a fixed reader as they were sold. After three months of testing the technology and analyzing the data, Myer reports that it achieved an increase in both floor and online sales, as well as a reduction in shrinkage. The pilot at Myer’s Melbourne store has now been extended to its high-end apparel department, and the technology has also been deployed at another four stores.

Myer’s Gary Stones

Myer had hoped RFID would boost its sales and improve its inventory management, while also benefitting the customer experience and reducing shrinkage. The initial challenge that prompted the retailer to seek a technology-based solution involved tracking a specific popular electronics brand’s products, which often ended up missing from inventory. The company wanted a better view into where these high-value goods were located in order to prevent shrinkage, while in the long run, it aimed to test whether RFID could prove beneficial for inventory counts throughout its store, and improve accuracy to enable omnichannel sales.

Therefore, says Gary Stones, Myer’s head of retail operations, the firm wanted to explore the use of RFID technology to improve inventory accuracy throughout its organization, far beyond simply tracking some high-value products. “As Myer currently fulfills online orders from stores,” he explains, “the need for improved inventory accuracy is ever-increasing as we grow our digital store.”

The solution consists of UHF RFID labels from Checkpoint’s Apparel Labelling Division, along with handheld readers for inventory tracking and fixed point-of-sale (POS) readers. Myer is using Checkpoint’s HALO software platform for data management, as well as the technology company’s POS solution, says Nicole Smith, Checkpoint Systems Australia’s customer relationship manager.

Hosted within the Microsoft Azure environment, Smith says, the HALO cloud-based software-as-a-service (SaaS) platform offers the retailer speed-of-deployment and scalability capabilities at a global scale, as well as security updates and disaster recovery. The system also comes with a RESTful application programming interface (API) to enable integration with retailers’ enterprise resource planning (ERP) and other back-end management systems.

When goods are received at the participating stores, sales team members attach tags to select brands and commission those tags via a handheld RFID reader and a bar-code scanner, thereby linking each RFID tag to a particular product’s stock-keeping unit (SKU). As the tagged goods are then stored in the back room or store front, staff members read the tags during inventory counts. Users can view any exceptions, as well as the status of goods and trends, on dashboards within the software.

When a product is sold, a fixed Checkpoint reader interrogates its tag at the point of sale. The item’s status is then updated as sold, enabling the company to maintain an up-to-date inventory list and replenish stock levels as soon as this is needed.

Checkpoint Systems Australia’s Nicole Smith

“Given that Myer is a department store with exclusive brands, national brands and concession partners, we needed to deliver a solution that could be deployed both in-store,” Smith says, and “through the supply chain and at source.” It’s important to embed the process quickly, he adds, and to make it a habit so it becomes part of the daily routine.

Myer’s stores receive merchandise from four distribution centers located across Australia, Stones says, while a small number of deliveries are received directly from suppliers. Therefore, he adds, tagging goods at the store was the best first step for the company. Since the system was taken live, Stones reports, “The RFID technology delivered significant business benefits, including improved sales, shrinkage reduction, stock-taking labor cost efficiencies, improved fulfilment pick success rates and improved inventory accuracy in stores.”

Sales team employees responded positively to using RFID technology, according to Stones. The speed and ease of completing cycle counts with RFID readers freed up time for workers to spend “serving our customers instead of completing administrative tasks,” he states. They also expressed having greater confidence in knowing what merchandise was available at the store at any given time.

Ensuring merchandise is available to customers is critical to any retailer’s ongoing success, Stones notes. During the RFID proof-of-concept, he adds, the company found that increased inventory accuracy meant fewer customer order cancellations and an improved in-store shopping experience. More of Myer’s 62 stores throughout Australia plan to deploy the technology this year, Stones reports, with additional categories being tagged at those locations.