There are three driving factors for RFID adoption in the apparel industry

There are three driving factors for RFID adoption in the apparel industry

In recent years, a growing number of retail RFID use cases have clearly demonstrated the benefits of being able to track inventory at the item level, leading to better shelf replenishment and fewer out of stocks. Su Doyle, responsible for industry solutions at US product identification manufacturer CheckPoint Systems, looks at the three driving factors for RFID adoption in the apparel industry.

Recent retail trends are creating three new tipping points for RFID in apparel: Omnichannel fulfilment; the addition of "up market" merchandise; and national and global retail store expansions.

Omnichannel fulfilment
Retailers have spent millions of pounds and a tremendous amount of time to build sophisticated algorithms that enable them to source and ship customer orders quickly and cost-effectively. Unfortunately, this doesn't always work as planned, because if retailers don't trust their inventory numbers (and they don't, most of the time), they tune their systems to only ship merchandise from given locations if a large quantity (eight or ten) of that specific item is thought to be in stock in that location. So even if the retailer could ship a pair of designer jeans from a customer's local store, it instead will ship from a more distant one if the retailer doesn't have confidence in its inventory.

This "buffer" prevents customers from getting goods sooner and costs retailers more in shipping fees and inventory investments. RFID addresses the issue by letting retailers know exactly how many of a given item they have in each specific location, enabling them to reduce their buffers. The result: customers are delighted by quick shipments and stores reap the benefits of lower costs and loyal customers.

Moving up-market
Many retailers have found that by carrying a small number of luxury items beyond their traditional lines, they can drive more sales, while providing a fresh, exciting look to their brands. But when moving up-market, retailers must focus both on maintaining a positive customer experience and protecting their valuable inventory. That's where RFID comes in.

Consider the retailer that offers designer handbags that cost hundreds of pounds more than those in its regular product line. These bags may be displayed by the retailer in a "store-within-a-store". By setting up an RFID zonal system, retailers can monitor movement of designer bags in real time, whereby customers are offered special service assistance within the zone if they are spending time with a particular bag, and security personnel are alerted if those bags are taken into "red" zones, such as fitting rooms, back-stair areas and stock rooms. This sort of targeted system around high-value items enables a higher level of customer service, while retailers safeguard high-value merchandise.

New market expansion
Traditionally when expanding to new regions, retailers have used historical data to determine what and how many goods should be stocked there. But this can be a problem when, for example, it bases its inventory needs on the historical performance of a suburban store and then opens an urban site with a smaller format, or when it expands overseas.

RFID can help retailers achieve greater success with such capital-intensive market expansions. By tracking every piece of merchandise in every store, retailers can gain insight into exactly the type and quantity of inventory required in specific retail locations. The ability to quickly sense needs, and swiftly respond, can help stores optimise inventory to maximise sales and provide the best customer experience.

RFID has proven effective at solving a large number of retailer needs. But the most compelling cases in fashion retailing – the ones that reach the tipping points for implementation – are likely to be found in these three scenarios.