Share |

Focus: RFID and Automated Identification and Data Collection (AIDC)

Feature Article from Our RFID and AIDC Subject Area - See All

From SCDigest's OnTarget e-Magazine

April 13, 2011

RFID and AIDC News: Business Case for RFID in Apparel Really Reaching Critical Mass, Driven by Improvement in both Operations and Customer Service

Rush for Mobility Applications also Playing a Role; Is Hype Getting Out of Control Again?

SCDigest Editorial Staff

RFID technology in retail has seemingly at last found its "killer app," as department and specialty apparel store chains are increasingly aggressive about rolling out item-level tagging programs.

Walmart, JCPenney, Macy's, American Apparel, Dillards, and The Gap stores are among the soft goods retailers in the US known or said to be rolling out item-level programs and mandates in some form or another. The rush is also on in Europe.

SCDigest Says:

When you tie the rush to RFID in many apparel retailers with a similar or even greater rush to leverage mobility, you could have a very powerful force.

What Do You Say?

Click Here to Send Us Your Comments

Click Here to See Reader Feedback

Coming out of the National Retail Federation (NRF) show in New York in January, some members of the Item-Level RFID initiative were saying the technology might become almost "ubiquitous" in apparel retail by the end of 2012.

Technology in retail has a history of fits and starts, so such aggressive predictions may indeed be premature. Indeed, IDC analyst Leslie Hand warned this week not to get too far down the hype path quite yet, noting that "The biggest hurdle isn't finding technology that works - the biggest challenge is reengineering and implementing processes that maximize the value and encourage industry and more specifically, user adoption. What troubles me is the "hype" that I have seen reemerge. Expectations of rocketing RFID technology sales in 2011 are unrealistic at best. Implementations don't happen overnight. It will take time for evaluations, pilots, and business case analysis, not to mention for capital budget approvals."

Hand also notes the RFID system roll outs will be easier for vertically integrated retailers such as American Apparel, versus the always tough challenge of getting successful compliance from hundreds or thousands of individual suppliers, many located overseas.

Still, apparel retailers are clearly excited, and may be moving to a stage where no one wants to be the last one in to the RFID wagon.

“The technology is here and it’s pretty exciting what we will have the ability to do,” said Cynthia DiPietrantonio, chief operations officer for Jones Apparel, after the NRF meeting in January.

“No matter how good the utilization of the bar code is, it is woefully short of what you can accomplish with RFID technology,” said Peter Longo, president of logistics and operations for Macy’s, at the same time.

Results from American Apparel Impressive

Hand says she recently met with managers at American Apparel, and heard a very impressive story. The first retail chain in the US to real roll our item-level tagging, or really any RFID program fully,

The company told Hand that they are getting full payback from the RFID investment in just 6 month, That includes about a 50% reduction in shrink when RFID and EAS are implemented in tandem. (See Americal Apparel to Test Combined EAS and RFID Tracking Tag). From data Hand saw at her meeting, she estimates about a 15-20% reduction in out-of-stocks in stores with RFID versus those with those without.

(RFID and AIDC Story Continued Below)

CATEGORY SPONSOR: SOFTEON

She added that American Apparel is "talking about tagging fabric, cases, and trollies in their manufacturing and distribution operations. This is a great example of a well thought out project, that is progressing as fast as time and money allows."

Many retail pilots are also showing substantial gains in inventory accuracy and reduction in costs do due cycle counting.

Mobility Also Plays a Role

Across nearly all retail segments, retailers are also looking at how they can leverage mobile applications for both their own associates and a customer's own smart phone.

Retailers see much potential if now still somewhat vague opportunity for integrating RFID in the store with cell phone apps. For example, a phone with an RFID reader might allow a customer to read a given item, and be given on the spot cell phone coupon based on the retailer's loyalty program. While some of these programs could be done with two-dimensional bar codes (QR code), RFID might provide the opportunity to further automate these and other applications. Apple, for example, is said to be putting an RFID reader into its next version of the iPhone. (See Not Clear What it Is, but Rumors Swirl that Apple is Building Major New RFID/Near Field Communications Innovation for iPhone5.)

"When you tie the rush to RFID in many apparel retailers with a similar or even greater rush to leverage mobility, you could have a very powerful force," said SCDigest editor Dan Gilmore.

The most interesting question may be if and when these developments create similar moves in other sectors of the consumer goods to retail supply chain.

Do you believe item-level RFID in retail is going to explode in the next two years? Or is the hype machine getting a little out of control? Will there be a spill over to other markets? Let us know your thoughts at the Feedback button below.

Recent Feedback

No Feedback on this article yet