Radio-frequency identification tags are revolutionising the way retailers manage their stock, especially in the fashion field. Attaching an RFID tag to every item of apparel allows clothes retailers easily to locate the goods shoppers are asking for. Tagging gives retailers confidence they can serve up the styles on display in their shop windows or online shopping sites.
Some 3.75 billion clothing and footwear items were tagged with RFID in 2015, according to research by IDTechEx and that figure is expected to grow as more retailers implement the technology.
As the world’s largest UHF RFID provider for the retail industry, Avery Dennison holds more than 800 patents and pending applications, and has been engaged with over 100 projects worldwide. The company develops, designs and manufactures RFID tags, and facilitates adoption by defining the entire solution and bringing in the appropriate partners for full rollout.
Avery Dennison has worked with brands and retailers, including Marks & Spencer, John Lewis and Macy’s, to implement RFID tagging on much of their merchandise. This helps the retailers keep tabs on their stock and to boost the accuracy of their inventory. Many other retailers are deploying and piloting the technology.
While much of the implementation of RFID has been in the area of clothing, it is spreading to other categories such as cosmetics and homewares. Food retailers are also considering using RFID tags on higher-value items, such as meat and fish, to help reduce out-of-date stocks and ultimately reduce waste.
RFID gives a retailer visibility of what they have in store and what is actually on the sales floor
For fashion retailers, tags are integrated into the price ticket, care label or packaging of clothing items. Each tag emits a unique radio frequency which identifies the item to an RFID reader. This can be in the hands of a shop assistant and tells them that the item is in the store. Retailers are increasingly using hand-held Geiger counter-style readers which beep more rapidly as they approach an item. This helps a shop assistant locate goods, whether they are in the stockroom or placed on the wrong shelf.
Francisco Melo, vice president and general manager for RFID at Avery Dennison, says in the world of fashion retail, having an accurate picture of the stock available is an important driver of profitability. If a shopper goes into a store with their heart set on a certain item, but they can’t find it in their size on the shelf or rack, they may walk out and go to a rival. If they ask a member of staff to find the item and the assistant can’t locate it, the store not only misses out on a sale, but may also lose a customer. RFID helps solve these problems by improving inventory accuracy.
Mr Melo says the accuracy of inventory is between 60 and 70 per cent for many clothes retailers, which means about a third of items cannot be quickly located. They may be in the stockroom, still in the distribution centre, misplaced on a shelf or perhaps stolen. Implementing an RFID system increases the accuracy by about 20 to 30 per cent. This creates a huge leap in profitability.
“We have examples of retailers where they found out they had complete sets of merchandise in the stockroom that had never actually made it to the shop floor, but at the headquarters everyone was happy that the merchandise was in store. But if it is in the back room inside a bag or a box, it is not going to sell. RFID gives a retailer visibility of what they have in store and what is actually on the sales floor versus what is not on the sales floor,” he says.
Stock-takes are usually done manually only once or twice a year as they are time consuming and labour intensive, and after the stock-check is done, the inventory quickly deteriorates month by month. However, RFID helps retailers conduct near real-time stock-checks.
RFID creates a process where the retailer is able to do a stock-take in a very accurate manner that is a hundred times faster than a manual process.
“RFID allows a fast stock-check to happen very efficiently,” says Mr Melo. “It can be weekly or whatever time-frame suits the retailer. You keep inventory accuracy, you keep visibility of stock, you keep efficiency and therefore you reduce the out-of-stocks.”
As consumers switch to online commerce, buying via their desktop computers, tablets and mobiles, as well through physical stores, the need for RFID is growing. Retailers are often reluctant to show styles on their digital shopping pages unless they are sure they can locate them in stock. RFID ensures retailers have confidence these items are in stock, allowing them to increase stock available on the website, which ultimately increases sales.
Given the huge benefits of RFID, especially in the clothing area, retailers are taking the new technology seriously. As Bill Toney, vice president of market development for Avery Dennison, says: “RFID is such a transformational technology it touches so many people – the supply chain and stores, the IT department and packaging, sourcing and merchandising.”
Avery Dennison has developed a five-step adoption process to help retailers understand the business case for RFID all the way from piloting the technology to deploying it. “We help build the business case around how the technology is going to help the retailer get a return on investment and drive shareholder value in the organisation,” says Mr Toney.
According to Mr Melo, there is no longer a question over whether to adopt RFID because its ability to improve stock availability has been proven. But he adds: “The million-dollar question is how to implement RFID. There is a tendency to just talk technology with the IT department, but those who really need RFID are the store operations people. They understand the level of inventory inaccuracy they have and understand the level of accuracy RFID can achieve. They become the champions of the technology in retail.”
Mr Melo predicts that the RFID revolution will transform the way we shop. For instance, Ralph Lauren recently announced the implementation of an interactive fitting room at its flagship Fifth Avenue store in New York. When a customer enters the fitting room, the items they are carrying are identified from their RFID tags and they are displayed on the interactive mirror. This gives details about the garment and recommendations of similar items. The customer can tap on the mirror to request different sizes and colours, and can even have a text sent to their phones with details of the items they tried on.
Such creative uses of RFID technology are likely to grow with increased competition between online shopping and physical stores. Meanwhile, the tags will be vital in enabling ever-faster delivery cycles for online retail as they will help the retailers locate the goods quickly and ship them to customers faster.
One myth that Avery Dennison shatters is that implementing RFID technology is somehow expensive. The costs are minimal when set against the improvements in inventory accuracy that the technology offers, Mr Melo concludes.
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