Being label conscious these days means more than consumers recognising brands, or retailers and manufacturers complying with legislation at the point-of-sale. Labels - be they hangtags with mobile barcodes, labels directly printed onto a garment, or RFID technologies - now represent a fundamental piece of the production process that can be leveraged to save money and increase sales.

While technical developments in printing such as the tag-less phenomenon of back label printing on T-shirts and underwear have certainly played a role, the greatest advances as of late have arguably been made in automated product identification.

Since the early 1980s, automated product identification has been dominated by barcodes that use a UPC (Universal Product Code), in which each digit in a data string is represented by bars and spaces. In just 30 years, these simple black and white lines have revolutionised warehouses and retail environments, with the technology still far from obsolete.

Developments in two-dimensional barcodes for example, such as Quick Response (QR) matrix codes that can be easily scanned and connected to the internet via a smart phone, offer the opportunity for customers to interact with a product beyond a store environment, linking to advertising, discount offers or even to social media environments such as Facebook, where fashion 'likes' spread like wildfire.

Importantly, this interaction is being largely driven by consumers. According to Laura Marriott, CEO of US-based mobile barcode developer NeoMedia Technologies, "consumers are increasingly comfortable using advanced media elements with a mobile device." 

NeoMedia's barcode reader software, the NeoReader, has now been downloaded onto 17m devices, and the company's platform managing 2D codes saw a massive 1,800% increase in usage in 2011. "It's just come on in leaps and bounds in the last year...the sheer volume of consumer scanning has increased incredibly," says Marriott.

RFID in apparel labelling
Meanwhile, advances in micro and printed electronics have opened up a series of other possibilities for product serialisation. The most influential, without a doubt, has been the development of RFID (Radio Frequency Identification) technology and its integration into apparel labelling.

RFID is proving to be a late bloomer. While it has not yet seen the explosive growth some were predicting a few years ago, the technology continues on a slow and steady curve upwards, with 2.88bn tags sold in 2011 versus 2.31bn in 2010 (a 24.6% increase), according to UK-based RFID analyst IDTechEx.

Major retailers such as Walmart, JCPenney, Marks & Spencer and Macy's have all rolled out extensive RFID item-level tagging, where savings are being tracked principally in supply chain precision and back room operations.

Compared to barcodes, RFID tags - particularly those on item-level garments - offer a significantly more powerful mode of collating and analysing product data.

RFID technology operates on radio frequencies, so tagged garments can be passed through a 'gate' or read with a hand-held scanner without the need to open packaging or have the tag visible.

Each garment contains a unique identifier and can be traced throughout the supply chain or within a retail environment, where the tag can perform multiple functions including item-specific Electronic Article Surveillance (EAS) or anti-counterfeiting authentication.

All-in-one solution
New applications for the technology are being developed all the time, one of the latest being a "truly textile" RFID label for the fashion industry.

The all-in-one solution has been developed by Switzerland-based TexTrace AG, a subsidiary of ribbon and narrow fabric specialist Jakob Müller AG, which has launched a sewn-on brand label into which a special flexible high-performance antenna yarn is interwoven and which is assembled with an encapsulated RFID chip - making it indistinguishable from a normal fashion label.

Sybille Korrodi, the company's head of marketing, tells just-style that the company has come up with a "smart" brand label that seamlessly integrates RFID technology inside the labels offering "much added value to fashion brands and retailers."

There are many products to help protect a brand against counterfeits and the grey market, but this goes one step further by tackling the issue at the manufacturing stage. Indeed, it can also help with stock management and electronic article surveillance to prevent theft - and the way RFID is incorporated also ensures the labels are durable enough to withstand production processes such as stonewashing.

"The beauty is that you can do all this with one label that is not even an additional label. You have it anyway, but now it's smart," Korrodi explains.

"Because the brand label is sewn on, it's not easy to tamper with or remove. Also, from a psychological perspective, people are reluctant to remove a brand label so they can show it off. If a product has been stolen it will be hard to resell if it doesn't have the brand label inside any more.

A 2011 University of Arkansas study sponsored by standards association GS1 US and the American Apparel and Footwear Association (AAFA), found that shrink could be reduced by as much as 27%, and out of stock (OOS) events reduced by as much as 50% with the use of RFID.

Better bottom line sales
Decreasing backroom labour hours can also translate into better bottom line sales, with staff spending less time on inventory and more time with customers, according to German retailer Gerry Weber.

The company began a large-scale RFID tagging scheme back in 2010 on its yearly production of 28m garments; in most cases sewing the RFID tag into the care label of the garment.

The company spent EUR2.7m (US$3.5m) rolling out the solution, with an estimated Return on Investment (ROI) of less than two years. Gerry Weber posted provisional sales revenues of EUR702.7m (US$919m) in the 2010/2011 financial year; up from EUR621.9m (US$813.3m) the year before.

Terry Kemp, RFID business development director (EMEA) of Hong Kong-based global label supplier SML Group says the company's RFID customers are saving about 85% of their time in terms of inbound goods scanning - with inventories that were previously taking 80 minutes now taking 10 minutes instead - and enjoying increased sales thanks to fully-stocked shelves.

Software and associated services are also becoming critical strategic areas associated with labelling technology like RFID, with retailers are looking to maximise benefits from this technology.

SML supplies traditional labels to 90% of the world's biggest retailers, and has recently launched a suite of RFID products and services called ViziT. This marries the company's RFID products with a cloud computing system, a service for the conversion of the UPC (barcode) to EPC (RFID Electronic Product Code) codes, and the supply of pre-encoded tags.

"We were really driven by customer demand - it wasn't us pushing something but customers saying this is what we want," says Kemp.

Click on the links below to read other chapters in the management briefing:

just-style management briefing: RFID technology gets increasingly sophisticated

just-style management briefing: Retailers hail benefits of new label technologies

just-style management briefing: Global labelling legislation a challenge