Dillard’s, Inc. operates primarily in the Sunbelt and central United States, offering name-brand and private label merchandise for apparel. The retail store was founded by William Dillard in 1928 (Pasiuk, 2005). The first store was opened in Nashville, Ark, in 1928 shortly after graduating from business school. Throughout the 1960s and 1970s, the Dillard’s chain expanded significantly, launching an aggressive mall campaign, purchasing existing department stores across South and South Atlantic, and moving its headquarters to Little Rock, Arkansas (Pasiuk, 2005).
Dillard’s is one of the largest department store chains in the United States, although, it has been hard-pressed in recent years to improve sales. Pasiuk (2005) says that Dillard’s continued to enjoy expansion success into 1980’s acquiring 12 stores from Stix, Baer, and Fuller, two department store divisions from Dayton Hudson, 12 stores from R.H. Macy, one-half intrest in 12 Higbee Department stores. Dillard’s also acquired 27 units from Joske’s, three from Cain-Sloan, 18 unites from D.H. Holmes. By then, Dillard’s market according to Pasiuk (2005), spanned from Arizona to Florida, and as far north as Oklahoma. In 1990’s, Dillard’s focused its efforts on construction, building over 60 stores. In 1998, Dillard’s further acquired 103 chain stores from the Mercantile Stores Company Inc., 75 of which Dillard’s ultimately retained after strategic sales of stores in coinciding markets, catapulting its presence in the Midwest.
According to Business Wirevia:
‘‘Dillard's, Inc. ranks among the nation's largest fashion apparel, cosmetics and home furnishings retailers with annual revenues exceeding $6.2 billion. The Company focuses on delivering maximum fashion and value to its shoppers by offering compelling selections complemented by exceptional customer care. Dillard's stores offer a broad selection of merchandise and feature products from both national and exclusive brand sources. The Company operates 284 Dillard's locations and 18 clearance centers spanning 29 states, all with one nameplate Dillard’s.’’(2013)
In the past two decades, the retail apparel industry has shifted from an industry dominated by small retail stores serving local markets into one characterized by larger retailers present in international markets. Martens (2006) says that supercenter and warehouse stores continue to expand into the retail stores industry as a result of many factors including advances in information technology systems, supply chain management strategies which drastically lower costs compared with traditional stores. Research indicates that e-commerce and online marketing have played an important role in the growth of retail apparel stores such as Dillard’s Inc.
Efficiency brought about by information technology has facilitated the penetration of retail stores in the U.S.A.. Martens (2006) says that important results are that Dillard’s Inc has increased its penetration in 29 states and this has increased the growth in apparel sales by as much as 0.287 points in the last five years. The legal and regulatory authorities in the country have enabled apparel stores to shift their focus to rural counties. The growth of the economy downturn has played a key role in the expansion of Dillard’s Inc in the United States. Martens (2006) also indicated that the industry is characterized by traditional supermarket mergers and acquisitions since late 1990’s with a total of 271 retail stores mergers and acquisitions from 1993 to 2002.
The growth of apparel stores such as Dillard’s Inc is explained by many factors. Dillard’s Inc enjoys a lower cost structure combined with expertise in marketing, store design and shelf space allocations. Martens (2006), however, say that the proponents of Dillard’s Inc and other retail stores argue that they reduce prices and increase competition through innovation and technology.
Competition in the retail apparel market has grown over the years because of the introduction of new technologies in this industry. The major competitors of Dillard’s Inc include Walmart, Kroger, Target, Walgreen, Costco, The Home Depot, CVS Caremark, Lowe's and Best Buy. Dillard’s Inc is ranked at position 66 in the top 100 retail stores. Over the last five years the industry has remained competitive. For example, Dillard’s Inc competes for clothing sales with specialty apparel stores such as Gap and The Limited. The apparel retail uses the concept of right merchandise, quantity, place and time which gives it the flexibility to adjust its merchandise mix to local tastes and demands (Dunne, Lusch & Carver, 2010).
Products and Services
Dillard’s sales name-brand and private label merchandise including women’s petites, juniors’, men’s and children’s apparel, in addition to accessories, lingerie, cosmetics and shoes. Plunkett (2008) says that the company sells merchandise through catalogs, various mail promotions and its website. Dillard.com offers an online wedding, baby and gift registry service. Dillard’s catalogs include Men’s Big and Tall, Missy clothing. In the fiscal year 2011 a third of the company’s overall sales came from its women and juniors departments.
Many of the Dillard’s stores also offer day spas, as well as nail and hair care services. It was estimated that at the end of fiscal year 2012, cosmetics accounted for 15% sales; ladies apparel and accessories 37%; juniors and children apparel 9%; men’s apparel and accessories, 18% and shoes 13% (Plunkett, 2008). The stores hopes to meet the changing needs of its female customers by providing active wear fashionable enough to be worn outside gyms.
Dillard’s Inc has long been aware of the benefits of taking a leadership role in the marketing supply chain and information technology. Dunne, Lusch & Carver (2010) say that Dillard’s has been able to achieve critical mass in purchases through other supply chain members, wholesalers, brokers and manufacturers to engage in profitable supply chain activities. The importance of information technology to the retail store can not be ignored as it promotes direct store deliveries, increases promotional allowances, extendes payment terms and special package sizes all of which help the apparel retail store to operate more efficiently (Dunne, Lusch & Carver, 2010). The need for more advanced information technology system is evident as the top management of the retail store seeks to cut operational costs, achieve efficiency in customer service, optimize supply chain activities and improve inventory management.
RFID Information Technology System
The best information technology system that should be in place at Dillard’s is radio frequency identification (RFID) information system. The RFID system should be integrated with Oracle’s E-Business Suite and Oracle Applications Server 10g. Oracle’s solution should include a Compliance package, an RFID pilot kit, and integrated support in Oracle E-Business Suite and Oracle Application Server. Radio frequency identification (RFID) information system will allow the retail store to attach tags with antennas and computer chips on apparels and then track their movement through radio signals.
The RFID system for Dillard’s will use tags with embedded microchips, which contain data, and antennas to transmit radio signals over a short distance to RFID readers. The readers will then pass the data over a network to a computer for processing. The chip in the RFID tag is programmed with information that uniquely identifies an item. It also contains information about the item such as its location and where and when it was made.
The RFID system will be composed with at least three components which include RFID tags or transponders which will carry identifying data. RFID readers or transceivers will be used to read and write tag data. The third component includes databases which will associate arbitrary records with tag identifying data (Bidgoli, 2010). For Dillard’s the tags will implement identification functionality on an integrated circuit (IC) that provides computation and storage (Bidgoli, 2010). The RFID readers will communicate with tags through an RF channel to obtain identifying information. Dillard’s will integrate the RFID readers into handheld mobile devices which allow workers to take inventory of the store by walking through its aisles.
The RFID database associates tag-identifying data with arbitrary records. These records will contain product information, tracking data, logs, sales data and expiration data. Bidgoli (2010) articulates that unrelated users may build independent databases throughout the supply chain or they may be integrated in a centralized or federated database system.
According to Evdokimov, Fabian & Günther (2011), Dillard’s retail stores should use RFID technology to enhance service and operations directly on the sales floor. The implementation of RFID information system at Dillard’s will enable the retail giant to improve inventory management, store operations and customer operations.
Implementing RFID information system at Dillard’s will reduce the manual labor involved in inventory taking. Smart shelves can automatically report their contents and workers can quickly take stock with help of mobile handheld readers (Evdokimov, Fabian & Günther, 2011). The system will bring improvement in the stock taking process and, hence, allow analysis of the inventory more frequently and with higher accuracy. With more detailed information at hand, store managers can make better decisions about orders and prevent out-of- stock situations. Evdokimov, Fabian & Günther (2011) argue that with this information technology system in place it is possible to detect shrinkage and misplacements earlier and incorporate the information in order management.
RFID system at Dillard’s will bring about improved visibility and yield additional insights into the store operations and detecting potentials for improvements. RFID system will act as a measure instrument to observe the effects of process changes. Evdokimov, Fabian & Günther (2011) say that taking fine grained apparel allows fine tuned analysis of product flows within store facilities. This in turn will enable the evaluation of performance metrics for store processes, improve the store layout, and reason about factors that impact sales quota.
The RFID system at Dillard’s sales floor will improve checkout operations. The RFID will replace barcode technology and significantly accelerate scanning processes or facilitate self serve checkouts. Evdokimov, Fabian & Günther (2011) say that this will not only reduce waiting times but also provide detailed sales data on an item level basis. This technological setup at Dillard’s will enable fine-grained monitoring of apparels on the sales floor and trigger actions that contribute to efficient sales floor operations (Evdokimov, Fabian & Günther, 2011). The smart shelves can detect when they run low on certain apparels and automatically call for replenishment. This significantly reduces out-of-shelf situations where products are in stock but not available on the sales floor in the shelf. In addition, smart shelves which come with RFID systems can automatically detect misplaced products and direct a worker to correct the placement.
RFID information system is ideal for Dillard’s because it can detect when certain apparels are ready for clearance sales or when cosmetics reach their date of expiry. Evdokimov, Fabian & Günther (2011) say that “with an RFID technology in place, it can initiate measures such as giving discounts on the product or demanding a worker to place the product at a more prominent position in the shelf” (p. 23).
The smart shelves that come with RFID systems can enable informational benefits by providing additional insights on shopping behavior. Evdokimov, Fabian & Günther (2011) stated that “the collected RFID data reveal details such as which products were selected in which order” (p. 24). These insights can help in optimizing product display and operations on the sales floor. Information from RFID-equipped fitting rooms and checkouts at Dillard’s can be used to observe customer behavior over time. The results can be applied to pinpoint situations where customer support appears insufficient and enable more efficient staff planning.
Besides improving store operations, RFID information system at Dillard’s can be an enabler for new customer facing services. These services can target the shopping experience itself or be part of after-sale services (Evdokimov, Fabian & Günther, 2011). Applications on the sales floor use RFID to provide the consumer with additional product information. Example includes electronic shopping assistants. An electronic shopping assistant at Dillard’s can be, for example, a device that is mounted to a push cart and equipped with an RFID reader. Evdokimov, Fabian & Günther (2011) established that consumers can use the shopping assistant to get detailed information about products. They can track down the origin of individual clothes and thereby get assurance about the quality.
RFID system together with a shopping assistant can also use the product information to make suggestions about purchases that go along well with already selected items or help the consumer choose apparels in accordance with certain fashions (Evdokimov, Fabian & Günther, 2011). Evdokimov, Fabian & Günther (2011) ascertain that smart mirrors in changing rooms can recognize the chosen items and make suggestions about fashionable combinations. An RFID system at Dillard’s yields another wide spectrum of after-sales service. The system will ease handling of warranty issues and returns. The unique identifier on RFID tags can make it unnecessary to provide the original receipt.
An RFID based shelf management guideline at Dillard’s would be useful during the early period of a high season when sales data is not enough to estimate customer demand. Mital & Pennathur (2010) say that even though sales data is reliable, they are not useful if the sample size is very small. In this case RFID data would help to replace the storage of sales data. RFID data would overcome this problem through data mining, thus ensuring its reliability. When the high season starts, the weighting factor for sales is the lowest. Carrying is medium and fitting shows the highest value. RFID readers installed at the exits will automatically identify the contents of a customer’s basket. In such cases payments can be made without an employee ever having checked the basket. Also, with RFID enabled payment systems, payment could be rendered without the customer even having to break stride on the way to the parking lot. This will indeed lower costs for both customers and retailers.
With RFID technology advanced automation of material handling at Dillard’s stores is possible and multiple tags can be scanned simultaneously without undoing the packaging. RFID tags are more robust and durable and they can store more information then bar codes can provide capabilities to track specific instances of individual items (Choi, 2011). Dillard’s can use the data on sales obtained from the RFID information system to improve marketing and promotion, personalized services, customer retention and product category management (Choi, 2011). In addition, the RFID system will be configured in such a way that the smart shelves will automatically order more products from the manufacturer when inventory runs low.
The RFID system will essentially improve supply chain visibility. Choi (2011) argues that when combined with other real-time location systems such as global positioning system (GPS), RFID’s ability to track individual items generates detailed sales and inventory data on a real-time basis. In addition, RFID can improve the data accuracy by reducing human errors in error prone operations such as counting and manual data entry. Choi (2011) indicated that Dillard’s can use the RFID system to reduce consignment reporting errors and products misplacement. Returns and refunds are also important part of supply chain management at Dillard’s. RFID will be used to direct defective merchandise back to the manufacturer and more quickly process returns and credit accounts. By automating these processes through RFID the costs of returns can be reduced.
In conclusion, Dillard’s should fully implement the RFID system because it will track every item from the time it is received in the store till point of sale. Also, since RFID tags do not require line of sight they can be used for cycle counting. It is evident from the use of RFID system that there is a definite reduction in man-hours required for restocking. Dillard’s will thus have increased man-hours available for customer interactions. The system will further deliver the visibility to which, in turn, will allow for faster receiving and better planning in cross-docking the received products.