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Every retailer wants to have the right product in the right place at the right time. That goal requires counting and checking inventory in each store to determine which items need to be restocked, usually manually. Radio frequency identification (RFID) promises to change all that.

For a large retailer such as Macy’s, manual scanning and inventory checks are inefficient and time consuming. In many cases, customers also move merchandise, which means that other shoppers cannot find it, even though the item is in stock.

With item-level RFID technology though, radio waves send information about the location of each item, both on its way to and inside the store. Although many retailers already use RFID to track pallets or crates of merchandise, Macy’s plans to have the technology in place on every item in all its stores by the end of 2012.

Another goal of such item-level RFID tagging is to reduce inventory costs. Macy’s initial RFID rollout will center on replenishment goods, that is, the items that are most frequently restocked in stores. At the moment of purchase, these products immediately will be restocked in the store. These replenishment items account for approximately 30 percent of Macy’s sales, so the retailer expects to achieve at least 97 percent accuracy in its inventory systems through its use of item-level RFID chips.

A major hurdle it must address before completing this RFID initiative is vendor support though. Most agreements make manufacturers responsible for attaching RFID chips to merchandise, before shipping it to the retailer. Item-level RFID will increase the necessary effort. But Macy’s also believes that most of its vendors will be supportive, because it offers benefits for them, as well as for Macy’s and for customers.

Discussion Questions:

1. What is item-level RFID? 

2. How is Macy’s rolling out this item-level RFID?

Source: George Anderson, “Macy’s Moves to Item-Level Tracking Using RFID,” Retail Wire, September 29, 2011.