Macy's Inc. (M) constant focus on inventory management, merchandise planning, price optimization and private label offering provide the company a platform to boost traffic, meet customer-oriented demand while improving the in-store shopping experience.
Following its strategy, the company recently adopted a technology known as RFID (radio frequency identification) to improve its inventory management.
Macy's added that it will start implementing RFID by the third quarter of 2012 in all of its stores to better manage replenishment goods (items that are frequently stored and resupplied when sold).
Moreover, the company added that RFID will correctly differentiate replenishment goods by their size, color and style and will facilitate in frequent count of item-level inventory. The company expects to complete the implementation of the technology in all stores by fall of 2013.
The move marks a significant development as replenishment goods represent approximately 30% of the company's revenue and RFID will assist Macy's to better serve its customers and drive sales by making the inventory readily available to its shoppers.
According to Macy's, RFID will be initially used on items, such as denim, men's furnishing, inmate apparel and women's shoes. Moreover, both Macy's and Bloomingdale's private brands will be included in the announced initiative.
Apart from tracking inventory, RFID will also facilitate in conducting multiple inventory counts in a year rather than conducting one physical inventory count.
In praise of the technology, Macy's chief administrative officer, Tom Cole stated that the implementation of RFID will create a win-win situation for its patrons, suppliers and the company, as the accurate inventory count will augment sales and lessen stock-outs.
Macy's, which competes with J. C. Penney Company Inc. (JCP), currently operates approximately 850 department stores in 45 states, the District of Columbia, Guamand Puerto Rico.
Currently, we have a long-term Outperform rating on the stock. Moreover, Macy's holds a Zacks #2 Rank, which translates into a short-term Buy rating.
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