Macy's Won't Make Its RFID Move Until Everyone Else Does

Macy's is quickly moving ahead with its RFID item-level tagging efforts, with one report saying the testing has expanded to six distribution centers. But the retailer is saying that significant additional moves will only happen when key competing retailers make their item-level RFID moves. It seems that the $25 billion chain has figured out the difference between being an industry leader and leading an army of one.

Nowhere is that distinction more critical than with item-level RFID. Suppliers will resist—if they resisted the early Wal-Mart edicts and risked the wrath of Bentonville, they'll resist Macy's—and they'll only sign on either when they see concrete benefits or when the percentage of retailers making the move is so high that they have no option but to comply.

The latest Macy's item-level RFID activity was reported by RFID 24-7 and involved comments from Bill Connell, Macy's senior vice president of logistics and operations.

The RFID 24-7 story said that the trial's goals are "improving cycle counts and maintaining physical inventory accuracy.

"We are in the process of evaluating the use of RFID specifically as it relates to replenishment for our apparel and footwear business," Connell was quoted as saying. "And we are deployed into six distribution centers for furniture and bedding. We're quite pleased with the initial results."

But those Connell comments, which included an acknowledgment that the chain is also testing at seven stores, is not the most interesting part. His next thought, about industry cooperation, is much more telling.

"We have stated that as part of the RFID Initiative, we have an eye toward industry adoption by mid-2012 and we fully expect to be an early mover along that timeline. Industry adoption means everybody agreeing to do it, and once that is agreed to, we intend to be an early mover," Connell said. "Right now, we are running pilots in a relatively small number of stores and that's all about just understanding what it's going to take for us to deploy on a large scale from a hardware and software perspective, and from the point of view of the store associate's use of the technology."There's nothing quite as enjoyable in the middle of summer as a nice bit of retail arm-twisting. In this instance, though, it's absolutely appropriate. Wal-Mart—with its Sam's Club division—tried going the RFID route alone and discovered that even the world's largest retailer can only do so much on its own.

Last year, Wal-Mart again tried to push an industry effort on its own, with its drive for retail Chip-and-PIN, which has also—thus far—fallen flat. I guess even the proverbial 800-pound gorilla has its limits.

As it happens, Macy's is far from alone among major retailers in testing RFID item-level efforts. For industry acceptance, that's the good news. Unfortunately, everyone is testing it in very different ways. For standardization, which is what suppliers need and what Macy's is insisting on, that's bad news. Staples is trying to bring the per-tag cost way down with a re-usable tag approach, while JCPenney is focusing solely on high-end products (no last-mile supply-chain checking) and Wal-Mart itself is now freaking out privacy experts by allowing customers to leave its stores carrying fully activated tags, hoping that the customer will later throw them out.

This means that Macy's is pressuring for both RFID item-level adoption and consistency in its adoption among a wide range of retailers. This is very good for the industry, but it's a very clever move by Macy's. First, it takes the pressure off of the chain for rapid deployment—despite the one-year self-proclaimed target—and doesn't force Macy's to move any faster (or to invest precious IT funds any faster) than its rivals. It, therefore, is minimizing the ever-popular leader penalty.

Second, it gets Macy's out of the awkward threats against suppliers. If the industry doesn't move, there are no threats. And if the industry does move, the supplier anger is diluted because it's directed at lots of retailers.

And third, anything that is so crucial to the supply chain and in-store really needs to happen with lots of chains at once. Every once in a while, Macy's reminds us how standards should happen.

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.