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Retailers: Item level RFID could be
ubiquitous by the end of 2012

01/10/11 | John R. Johnson | email

Item level RFID technology is well on the road to mass adoption by apparel retailers and could become ubiquitous by the end of next year. That was the message coming out of Tuesday morning's meeting of the Item Level RFID Initiative held during NRF in New York City. The event was attended by more than 100 retailers, suppliers, technology providers and members of academia.

The immediate goal of the group, which was formed in June and formally announced in November, is to further accelerate item level tagging by publishing industry guidelines and business case roadmaps for return on investment for retailers and suppliers.

"The technology is here and it's pretty exciting what we will have the ability to do," says Cynthia DiPietrantonio, chief operations officer for Jones Apparel, which operates 750 retail stores.

"No matter how good the utilization of the bar code is, it is woefully short of what you can accomplish with RFID technology," says Peter Longo, president of logistics and operations for Macy's.

The collaboration between Walmart, JC Penney, Kohls, Jones Apparel, Macy's, Dillards, Levi Strauss and others in the Item Level RFID Initiative will likely lead to the biggest retail supply chain transformation since the bar code. The group will also study serialization issues, tagging compliance and how to handle the massive amounts of data that retailers will soon harness from RFID.

Longo and DiPietrantonio both shared new information about their chain's RFID goals for 2011 and beyond. Beginning next month, Macy's will roll out item level RFID across seven stores and will start tagging several product categories, including men's jeans and women's lingerie. The focus will be on product segments that are typically high margin items and that are difficult to keep in stock.

Macy's is also turning heads by piloting RFID at two additional stores with the goal of relying on those brick locations as backup fulfillment centers for online orders that are unable to be filled at its e-distribution centers in Tennessee, Connecticut and Arizona. The increased visibility at the store level would allow Macy's to rely on retail centers for fulfillment, something that isn't possible today because of poor inventory visibility.

"Having gone through the EDI revolution, the reward of RFID will trump anything that we've done in the last 15 to 20 years," says Longo. "It is that big, and RFID is truly a transformational technology and will take us to a place that is very different than where we are today. The debate is over. This is no longer a discretionary decision."

Longo said that the RFID expansion will include "select categories of the business that tend to be the most opportunistic to take advantage of RFID, such as SKUs that are color and size intensive in very replenishment-oriented businesses."

Macy's RFID expansion will follow on the successful piloting of item level RFID at its Bloomingdales store in the Soho area of New York City, and will help the firm to "procedurally learn how to be good at using RFID technology."

Jones Apparel, which operates 725 company-owned stores and manufacturers apparel goods sold by other retailers like Macy's, implemented an RFID trial at two of its company-owned stores in New York City, and achieved some exciting results. For starters, the stores reduced the time for product searches by 18 percent.

"That was really the big win," says DiPietrantonio. "For a retailer in New York City, your back room is downstairs in an ally. So when a customer asks for a size 8 red shoe, RFID gave the ability to the sales clerk to take the handheld and say we don't have that product, but let me show you what we do have. That's a great option opposed to running all the way down to the store room and back, only to say that we don't have that style and risk having the customer walking away."

In addition, receiving and transfer productivity improved by 25 percent, and the time required to conduct a full store cycle count was reduced by 92 percent. Average inventory accuracy improved from 85-90 percent to 97-99 percent. "It was a pretty exciting pilot," says DiPietrantonio. "What we really saw was the excitement from sales associates and the store manager to have the ability to sell into products that we have in inventory."

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