By 2010, nearly one-third of fashion retailers will have implemented RFID at item level in stores and the supply chain as they strive to increase efficiencies and save costs according to new research.

And the more expensive and fashionable a product, such as designer jeans and lingerie, the better suited it is for RFID tagging.

The analysis has been carried out by Kurt Salmon Associates (KSA), which has developed a tool to help accelerate benefits from RFID item-level tagging.

And it says uptake is being encouraged by tests showing a good return on investment from RFID programmes, and the fact that the cost of tags and readers is falling steadily. Retailers implementing RFID at store level include Mitsukoshi, a leading Japanese luxury department store, which is now seeing a 20% sales lift.

KSA's Product Flow Management Tool has been developed to help improve retailers' decision making processes by illustrating product flow in a virtual fashion store environment, giving higher visibility levels and enabling problem solving in the daily operations within a fashion store.
It is structured by key store processes and enables process changes combining RFID and mobility (immediate feedback).

KSA has identified three key areas where RFID can make improvements: reduction of out-of-stocks, reduction in shrinkage and customer service.

Time is saved in the back room because RFID enables goods to be received automatically, there are fewer moving errors and goods are stored correctly. Because items are easier to find in the back room, it is quicker to get them to the shop floor.

Once items are on the shop floor, sales associates can stock-take more accurately and much faster. Product performance can be tracked with the maintenance of planogramms leading to better assortment availability.

Since sales associates spend less time searching for items - because RFID allows them to know where items are at any given time - customer service is improved and sales associates can stay fully engaged with their customers. Another direct improvement is the reduction in shrinkage.