Retail's BIG Show: Macy's Has Mastered Inventory And You Can, Too

On average, retailers are only displaying about 80 percent of their store's merchandise on the showroom floor. That means at least 20 percent of a store's goods can't be sold because they can't be seen.

That's a problem, and a costly one at that. By the time many stores realize that a new shipment has arrived in the back room, the merchandise has less time on the selling floor to move at full price. Even worse, if there's a box or two of goods that never make it onto the floor, that means it will eventually come straight out of the storage room and onto the clearance rack. Yikes.

Retailers like Macy's (NYSE: M), Saks (NYSE: SKS) and Urban Outfitters are determined to not let this happen to them and have all implemented RFID applications to help store associates manage and track the large amount of merchandise arriving in stores every day. Macy's in particular has rolled out RFID technology created by Tyco Retail Solutions in all Macy's and Bloomingdales shoe departments. Every display shoe is tagged with an RFID label so store employees can easily and accurately inventory the shoes on display each day. As a result, every style of shoe that arrives in the stock room has a sample represented on the showroom floor.

"This was a unique problem that we weren't even aware of," said Patti Harney, senior manager of retail solutions marketing at Tyco. "The new styles would come in and no one puts them out on the floor. Now, every day, they scan the RFID tag on the display shoes and the application compares what's on the floor to what's in the back."

Since implementing the program, Macy's has seen a huge improvement in inventory management. It used to be that the store had 80 percent of merchandise displayed, and now that number is in the "high 90's and in many instances 100 percent," says Harney.

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