Bloomingdales Embraces RFID

bloomingdales rfidA recent study regarding the use of RFID technology in the supply chain was published by the RFID Research Center at the University of Arkansas. The 13-week item-level tagging experiment was conducted at Bloomingdale’s stores last fall, and ultimately improved the store’s accuracy by 27 percent Let’s take a look at how these results were achieved.

In the experiment, two Bloomingdale’s stores in the northeastern United States were used, one was a test store, and the other a control store. At the test store Avery Dennison EPC Gen 2 passive UHF RFID tags were placed on men’s and women’s jeans. The RFID tags were attached to the jeans as they arrived to the test store, and the sales staff removed the tags once the jeans were purchased. Returned merchandise was retagged via a RFID printer/encoder. In order to properly count the tagged inventory, staff were supplied with handheld Motorola EPC Gen 2 UHF RFID readers.

Throughout the initial five weeks of the pilot, the test store staff used RFID readers and barcode scanners to count the RFID-tagged stock. They also scanned the barcodes attached to the same SKUs in the control store. They both performed counts three times per week, both on the sales floor and in the back room.

From there, the data was used to establish a baseline for the inventory in the men’s and women’s departments in both the test store and the control store. For the remainder of the experiment, both barcode and RFID counts were conducted two times a week via a contracted inventory service.

In the test store, inventory counting through barcode scanning and RFID technology provided a comparison of accuracy and efficiency. In addition to inventory counts, RFID readers were mounted at all employee and customer exits and entrances in the test store, allowing tagged merchandise to be more closely monitored.

Ultimately, researchers found that accuracy levels declined over the 13 week experiment when software was not adjusted by actual counts done with the RFID readers. However, once the inventory management system was adjusted to the actual counts done with the RFID readers, inventory accuracy improved by 27 percent, with overstocks decreasing by 6 percent and under-stocks decreasing by 21 percent.

Aside from accuracy, the amount of time it took o conduct the physical inventory counts decreased drastically. While barcode scanners could count approximately 209 items per hour, an astounding 4,767 items per hour could be counted with RFID. Thus, there was a net result of a 96 percent reduction in cycle-counting time by using RFID instead barcodes. By saving so much time, Bloomingdales would ultimately be able to perform more physical inventory counts, rather than just doing them a couple of times a year. The RFID system implemented at Bloomingdales was also able to prevent inventory losses.

Ultimately, the researchers plan on using the Bloomingdale’s study as a part of a more grandiose effort to demonstrate the ROI of RFID in retail environments. It will be interesting to see if further studies can influence other brands to make the move toward implementing an RFID based solution in their stores.

Do you think RFID technology will become a retail store staple?