1. 1 MACY’S, INC. – Bloomingdale’s Item Level RFID Pilot Overview Macy’s Logistics RFID Technology in Furniture & Bedding

2. 2 Macy’s Today Macy*s Annual Sales = $20B Stores = 808 In 45 States, The District of Columbia, Guam & Puerto Rico Macys.com Bloomingdale’s Annual Sales = $2B Stores = 40 In 12 States+ 1 st International Location – Dubai in 2010 Bloomingdales.com Annual Sales – $22 Billion NYSE Symbol “M” Diverse Workforce Of Approx. 167,000 Employees

3. 3 MACY’S, INC. – Bloomingdale’s Item Level RFID Pilot Overview Fall 2008 Spring 2009

4. 4 Bloomingdale’s RFID The sustainable inventory solution?

5. 5 RFID Pilot-Phase I Bloomingdale’s Item-Level RFID Pilot through VICS Objective: Pilot the use of item-level RFID technology in a Bloomingdale’s store location to determine impact in the areas of inventory accuracy, out of stock, locating product,loss prevention and sales.  Project ‘kick-off’ with Bloomingdale’s, ADT, Avery Dennison, Macy’s Logistics/Systems, Motorola U of Ark, Stealth Network Communications  2 Pilot stores: 1 RFID-enabled – SOHO, NY,NY; 1 non-RFID stores – Short Hills,NJ (control store)  Men’s and Women’s premium denim jeans; 10,000 units each store.  Pilot ran Sept 08 to December 08 Both control and pilot store executed 3 barcode and 3 RFID inventories a week. Store associated RFID tags with UPC during daily receiving process. Standalone system. SKU file updates to VUE software weekly. Decommissioning station at POS. l

6. 6 Bloomingdale’s SOHO Conceptual Design

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8. 8 Item-Level RFID Pilot – Fall 2008

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10. 10 Item-Level RFID Pilot – Fall 2008

11. 11 Pilot Metrics PHASE l Validated analytics for ourselves. Forced ourselves to look into the data. Questioned everything!

12. 12 The Foundation for a Business case. Concept of Gross Inventory Distortion and the Impact to Item File Accuracy I – Sources of Distortion: POS transactions - sales and returns Booking errors - both DC and store direct (over bookings, vendor misroutes ASN/128 ) Shortage- Stolen, Fraud Re-ticketing Vendor Substitutions Handling of RTV and Damages Inventory taking II – What does Distortion Impact? Item file integrity Reporting tools- any report associated with on hands Replenishment (in-store reporting/inforem; ROP release Item locator system/ store to door III- How do we Correct? Frequent Item updates Communication and education at all levels Focus on high distortion, high replenishment and high velocity businesses for now. Measure results; drive Macy’s to change their existing inventory model. V- What could we Gain? Release of ROP more often perpetuates turn Stockroom to floor – drive c/s representation (large doors) Inventory management Accurate reporting Associate confidence Customer satisfaction IV – What are the Risks? Could create more distortion Place us in overstock position

13. 13 Soho Expansion-Phase ll Secured capital funding Expand RFID throughout the Soho store excluding shoes, FA, and cosmetics (200,000 units tagged to date) Additional infrastructure to include readers/antennas in all stockrooms, receiving and DC. Read/write stations at registers MST network integration and enterprise solution. Perpetual inventory integration ( Work in progress) POS integration (work in progress) Expanded reporting (work in progress) Added additional tracking zones, to include DC. Store works replenishment reporting 3x daily Store use Geiger counter method to find merchandise. Inventories every other week. Cumulative data collection at exits

14. 14 Responsibility Matrix FunctionTasksMeasure Logistics Divert Tag Write Re-pack Ship Touch Labor Expense Vendor Accuracy (distortion) Impact and value of outsourcing tagging Receiving Ready Merchandise for FloorAccuracy received vs Logistics Touch Labor opportunities, Merchandising Efficiencies Operations / Merchandising Follow set planogram/color size Inventory bi-monthly Execution/Training Touch Labor reduction and reallocation. Replenishment Execution. Impact to stockroom inventory Sales Value of color/size full representation Write tags for re-ticketing(reticketing impact) Merchandise to floor not stockroom Replenishment Sales- back to front Frozen release impact Impact - item update to sales Customer impact Shortage Control Item file updates SKU file (Planogram) updates EAS v RFID Audit program In-store Distortion Inventory Results/efficiencies Item Updates Loss Prevention (case productivity) MST Primary - Network Integration (on-net) Secondary - POS Integration, PI integration Sustainability

15. 15 Driving the business case @ a larger scale Replenishment sales – promo/non-promo Release of reorder point allowing for replenishment One and two rule- item locator-increase the % of filled orders AUR increase MKD decrease the % of goods “aging” in the stockroom Gross Margin increase Touch labor reduction or reallocation Liquidation compliances increase-all existing mdse found Shortage reduction Improved Inventory management performance RFID provides continuity of operational effectiveness beyond promotional period To prove viability we should show : 1.Improved store performance versus ty/ly, plan, other stores with like business. 2.Grow incremental sales?

16. 16 What we are Learning Granularity into the business makes a difference, we can work smarter not harder and improve service and sales. Removing distortion resets the foundation our tools are based on bringing back confidence to the users. We can work within our current systems not around them as they were intended alleviating more problems. Taking an inventory once a year is not enough, but it doesn’t need be once a week either. We have opportunity in replenishment on many levels. RFID implementation is flexible and should be adjusted as the business need is determined. Know your model, know the ROI, leveraging the technology to fit your business needs. We run our business well, we can run it well everyday!

17. 17 MACY’S, INC. – Macy’s Logistics RFID Technology in Furniture & Bedding

18. 18 MACY*S Furniture & Bedding 2008 Annual Sales – 1 Billion + Units Received – 2.1 Million DC Network – 14 Parent / 6 Hubs Supports 432 Macy’s stores / 284 Macy’s Furniture Only Stores Supports 26 Bloomingdale’s stores (6 Bedding Only; 2 Furniture Only) Supports all Macy’s Inc internet selling 800,000 Customer Deliveries 5 Trading partners represent 50% of Furniture Purchases 20 Trading Partners represent 75% of Furniture Purchases Technology Focus - Barcode RF Scanning / EDI

19. 19 Technology Focus - Macy’s Logistics Furniture & Bedding Why RFID? Used in enterprise supply chain management with various companies to improve the efficiency of inventory tracking and management. Is superior to barcode identification that we use today in that it does not rely on the line-of-sight reading that bar code scanning requires to work. lays the foundation for future process improvements RFID is an advanced technology … it works! Why in Furniture & Bedding Warehouse Facilities? High density product, High Average Unit Retail Consistent Operational standards and processes Will gain enhanced inventory visibility with improved accuracy and reduction in ‘not in location” units resulting in increased sales opportunities. Limited vendor / supplier base to collaborate with on upstream supply chain solutions

20. 20 Objectives Validate that the use of RFID tags and readers will enable ‘Macy’s Logistics’ Furniture and Bedding Operations to significantly reduce: –time and resource required for Cycle Counting –“not in location” stock issues Assumptions To develop ability to apply pre-encoded / printed RFID tags and/or print tags in- house on demand and scan to cross reference the tag to internal locator cards Initial deploy – integration with RFID and Cycle Count programs - replacing the piece by piece barcode scan in the bins. Develop an integrated solution into Macy’s systems to enable future partnerships with vendors, who would apply an RFID tag using the UCC128 number as the ID. Macy’s Logistics RFID Technology in Furniture & Bedding RFID Objectives and Assumptions - Initial Phase Cycle Counting 1

21. 21 Key Metrics Improved inventory accuracy and reduced cycle count time Benefits Reduction in cycle count time and labor with RFID-enabled readers Enhanced inventory visibility with improved tracking and reduction in “Not in Location pieces”, resulting in increased availability of product for sale. Vendor provided RFID tags would expedite new receipts and put away of the merchandise and eventually eliminate tag printing in the facilities. Scope Implement RFID for Cycle Count in the 8 parent Furniture & Bedding warehouses. Macy’s Logistics RFID Technology in Furniture & Bedding Metrics and Benefits – Initial Phase Cycle Counting 2

22. 22 Use pre-encoded / printed RFID tags and apply to merchandise in receiving, inbound returns, and transfers (1 tag per unit) Process: Scan UCC 128, print internal locator card, apply the RFID tag, and “associate” the RFID tag to the locator tag via barcode scanning. Next Steps: Select Pilot Vendor (s) would begin affixing RFID labels to cartons with the UCC128 number as the RFID number Cycle Counting via RFID Process Overview: Cross Reference RFID tags with Internal Locator Tags

23. 23 Cycle Counting via RFID Process Overview : Tag Inlays – Bin Labeling and Merchandise Labeling AD-223 Inlay - into a 4x1" tag with high grade adhesive. The Inlay, embedded into the label, is encoded with a (7) digit location number and a visual printed (7) digit location number. The tag/inlay is placed on a 4x1 foam backing placed onto metal racking. The AD-224 Inlay, into a 4x2" tag with high grade adhesive. The Inlay, embedded into the label, is encoded with a (20) digit, sequential serial number with a visual printed (20) digit sequential serial number and bar code. The tag/inlay is placed on product.

24. 24 Motorola RD5000 RFID readers are mounted on one side of the lifts used for cycle counting. A second antenna is attached to provide two individual read zones: One for Product tags One for Bin tags Cycle Counting via RFID Process Overview : Collecting Data via RFID

25. 25 Lifts follow a prescribed path on each side of the test aisles following each shelf, then up a level and back, etc. Product and bin tags would be read automatically. Software will use read time stamps and other values to determine current bin and product within the bin. Cycle Counting via RFID Process Overview : Collecting Data via RFID

26. 26 Summary Barcode Cycle Count RFID Data CollectionCycle Counter hand scans each unit RFID readers mounted to forklifts Reconciliation Unit variances reported and researchedNo Change to current process ControlsPerpetual Inventory Report CardNo Change to current process Perpetual Inventory Health Report Cycle Count Discrepancy Report Cycle Count Error Resolution Weekly Audits  RFID will replace the manual scanning of units during cycle counts  Data will be posted to cycle count system and variances will be reported in same manner as current process and variance reconciliation will remain as it does today Benefits of RFID Cycle Count  Payroll savings/productivity improvements  Reduced cycle count time Increase number of counts each quarter Additional time to reconcile/resolve NILs Improve accuracy of counts  Establishes framework for future use of RFID functionality First use of this technology integrated to Macy’s systems!

27. 27 RFID Technology in Furniture & Bedding Distribution

28. 28 RFID Technology in Furniture & Bedding Distribution

29. 29 RFID Technology in Furniture & Bedding Distribution

30. 30 RFID Technology – High Level Architecture

31. 31 Lessons Learned: Initial Phase Involve key internal stake holders to develop the business case Keep it simple with a narrow scope for the first phase Partnership with key technology vendors is key! Detailed Site analysis during planning and development prior to ‘smoke’ testing and ‘go live’ Environment specific hardware installation Technical testing with readers / tags - ensure read rates outside of the application Reader and Inlay matching process – allow time for tuning Begin testing back end processes as soon as possible RFID technology works!

32. 32 RFID Technology - Next Steps … 2010 / 2011 Phase II: RFID Data Capture – Receiving Interface with Receiving; Eliminate locator tag printing Enable scan of UCC128 label instead of locator tag Select Pilot Vendor(s) to begin affixing RFID labels to cartons (UCC128) Phase III: Delivery Binning via RFID Capture RFID as merchandise is moved into the delivery bin and update record to binned Provide visibility / manifesting tracking for line haul – movement between hubs and stores Phase IV: “Hands Free” Putaway and Picking Utilizing the forklift mounted readers eliminate hand held scanning during putaway and pick keeping the associates hands free to handle the merchandise. Other Areas: Furniture & Bedding Departments within Store / Gallery Locations

33. 33 Questions?