Macy’s Leverages RFID to Fuel Omni-Channel Fulfillment Strategy

Tyco Retail Solutions announced Macy’s use of RFID to fuel its “Pick to the Last Unit” (P2LU) program for omni-channel order fulfillment. With Tyco’s TrueVUE RFID Inventory Visibility platform, Macy’s is accessing its full inventory assortment and establishing enterprise-wide inventory accuracy in key product categories to fulfill customer demand. Having this level of inventory accuracy and visibility helps Macy’s drive increased sales to provide a better customer experience.

As a customer-centric retailer, Macy’s omni-channel strategies are focused on providing a combination of iconic brands and assortments for customers to shop anywhere, anytime and anyhow they choose. The retailer realized that brick-and-mortar stores could be their greatest asset for single unit orders, essentially functioning as robust and flexible “warehouses” to utilize the full assortment of owned inventory.

With item-level RFID, Macy’s can focus on product assortment and service while using existing inventory to address fulfillment demands. Changes to inventory management supporting this omni-channel strategy have enabled Macy’s to reduce $1 billion of inventory from its stores.

Furthering that effort, Macy’s launched its P2LU program for omni-channel fulfillment. P2LU attempts to ensure that the last unit of an item in any store is made available for sale and easily located for order fulfillment. Typically, retailers don’t expose the last item of a SKU to online purchasing because they don’t have enough confidence in their inventory accuracy or ability to find the item to make every unit available for customer orders.

“About 15% to 20% of inventory is accounted for by the last unit in the store,” said Peter Longo, president of logistics and operations at Macy’s. “It’s a massive amount of budget, either marked down or not sold, and it is curable through RFID.”

Using Tyco’s RFID inventory solution, Macy’s conducted a P2LU pilot project with women’s dresses which yielded impressive results. Fulfillment sales for pilot stores were up significantly compared to last year. Markdowns for pilot stores also showed an improved trend versus other stores. Macy’s now has confidence to fulfill customer demand even if only one of an item is left in stock.

By leveraging single unit inventory, Macy’s can help drive sales and margin. In addition to sales lift on regular and first markdowns, the retailer is reducing inventory costs by lowering interim inventory requirements by one-third.

“Macy’s is a great example of how item-level RFID bolsters inventory optimization and opens up a world of possibilities for omni-channel fulfillment success,” said Nancy Chisholm, president, Tyco Retail Solutions. “By utilizing our unique RFID Inventory Visibility offering, Macy’s has a complete view of enterprise-wide inventory to satisfy customer demand and achieve their “buy anywhere, fulfill anywhere” vision. It not only allows them to enhance the overall customer experience, but also to maximize revenue opportunities from omni-channel programs.”