Macy’s to Implement RFID Technology

In every level of business, technology is an integral element in creating and sustaining a competitive advantage.  The use of the latest information systems can allow a firm increased functionality and profit margins if utilized correctly.  As it has advanced, technology has become much more affordable for businesses to implement into their plan.

Technology can often be the essential difference between a business that is experiencing swift growth and another that is experiencing decline.  Such is the case of Zara and the GAP.  Zara is a rapidly expanding.  It spends 5-10 less on technology than its rivals, and has a greater return on their investment.  They keep inventory to a minimum and bring in 12,000 fresh item designs a year.  The constant change of their items keeps customers coming back, as there is always something new in the store.  An idea can be found on a store shelf in only 15 days time.  GAP, on the other hand, takes risks by guessing the styles for each season.  This is a high risk process, because if they guess wrong they could take huge lasses for that quarter. 

One of the largest department store chains, Macy’s, has recently adopted a brand of technology to enhance its ability to provide goods the consumers desire in an efficient manner.  The technology they are adopting is called Radio-Frequency Identification (RFID).  Originally created to identify friendly aircraft in World War II, RFID has been repurposed and applied to merchandise as the costs of the technology have decreased.   To use this, Macy’s has to install the RFID technology in its stores and chips into its garments.  They are beginning installing RFID in the shoe department, and planning to expand its use storewide gradually over the next couple of years. 

The RFID technology will allow Macy’s several advantages.  First, it will provide a fast, detailed list of inventory and reduce stock-outs and overstocks.   It will also allow Macy’s to track its merchandise through the supply chain and enhance security of goods.  Additionally, the RFID technology will enhance Macy’s customer service by allowing them to quickly check inventory from stores nationwide and ship the item directly to the customer’s home.  In this way, Macy’s will be integrating their stores and online shopping.  Sales associates will be able to sell products that are out of stock at the store and increase customer satisfaction.

As is often the case, this technology is a double-edged sword.  There is concern that RFID risks the privacy of the consumer, as it could be used as a consumer profiler and tracker.  However, the implementation plan designed by Macy’s makes it extremely low risk for the consumer’s privacy while upgrading efficiency and overall shopping experience considerably. 

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4 thoughts on “Macy’s to Implement RFID Technology

  1. I liked how you tied in Zara’s smart usage of data technology to Macy’s move toward increased usage of data technology. I agree that while the implementation of new technology may have its initial setbacks such as cost of installment and potential risks like invading the privacy of consumers, these will be outweighed by the advantages that RFID presents for Macy’s. The money Macy’s will save from a more efficient supply chain and the revenues Macy’s will gain from better customer service will surely surpass the a price they will pay for the installment of the technology. Just like Zara, I think Macy’s will experience a greater return on their investment in this new technology than their previous business strategy.

  2. What I find most interesting about this article is how firms and stores that previously had no business being around technology, are now struggling with competitors over finding the best technology for their stores. Seems ironic… But it’s truly amazing how even a clothing store like Macy’s now has to compete in the technological world in order to increase efficiency and keep up with the rest of the retail world. I liked how you related this to Zara and GAP, where GAP fell behind in the technology realm and suffers as a result. The way you moved on to say that Macy’s is making sure this doesn’t happen painted the picture well. I was also intrigued by the double-edged sword aspect of RFID. What consumers want drives retail, and not many consumers will want to be tracked by military technology. There is even a moral side to this as tracking people for business seems a little unethical. The only thing I think you are missing is a description of what exactly RFID is. If you went into depth a little about what this technology consists of or maybe included a picture/video example I think it would enhance your argument.

  3. I like the forward looking tone of your post. RFID tags have been talked about a lot, and are often idealized. I believe they are a tool to really tap into massive amounts of relevant data. There is the concern that RFID could over step some boundaries, but if a company is transparent with their use they should be fine. The clothing industry is ultra competitive and Macy’s is a store that I think could really use a boost. The one near my home is not up to par with other stores nearby.

  4. This post caught my attention as this technology implementation by Macy’s seems to have great potential. I believe that the RFID tags will allow Macy’s to collect unprecedented levels of data that will increase profits by increasing efficiency. My one concern, however, is that this technology will not work as Macy’s predicts and they will have spent a large amount of money with few positive results. This case is an example of the double-edged sword. Macy’s must take the risk in order to get the reward, even if the reward is not certain. I hope for Macy’s sake that the RFID tags are successful.

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