RFID: Success strategies for apparel retailers

RFID is changing business and bringing radical change, occupying a significant position in the Retail IT landscape over the past decade. Until now, beacon technology has been primarily used for in-store digital marketing efforts. RFID solutions can offer much more detailed location data for certain applications than proximity-based beacons, eventually helping in assessing the effectiveness of a store's layout, displays and endcaps on a real-time basis.

  • Updated On May 25, 2017 at 03:08 PM IST
Read by: 100 Industry Professionals
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Proving the authenticity of products has been a challenge to building consumer confidence for any brand. The rise of counterfeiting and illegal cloning have been a threat to retailers worldwide! Luxury houses are prone to having their items stolen and sold in the black market, as they are synonymous with status.

Keeping track of high-end products is key to accurate inventory. Knowing what arrives in your distribution centre or store and then knowing what leaves should, in theory, give you an accurate inventory. However, boxes and crates are often misplaced & shopper behaviour leads to items turning up all over the store, making real-time location tracking a tedious task. Unlike a regular Walmart or Target store where each product has multiple sizes and variations, Luxury products are limited edition and often custom made; each misplaced product could potentially equate to loss in sale, customers and opportunities.

With technology driving an “always on-always open” digital marketplace, anything can be faked. So how can the Retail industry stakeholders ensure that the luxury handbag sitting on a store shelf is absolutely Authentic? At the heart of any good anti-counterfeit plan is inventory visibility, with technology as its critical enabler.

RFID is changing business and bringing radical change, occupying a significant position in the Retail IT landscape over the past decade. Until now, beacon technology has been primarily used for in-store digital marketing efforts. RFID solutions can offer much more detailed location data for certain applications than proximity-based beacons, eventually helping in assessing the effectiveness of a store's layout, displays and endcaps on a real-time basis.

RFID over barcodes
Multiple types of RFID tags are used in the apparel industry. Common examples are Hang tags, Self-adhesives, and Printed Fabric Labels (PFL). RFID can eventually replace barcodes in applications where bulk counting is routinely performed. An RFID tag can hold much more data about an item than a barcode. Additionally, unlike barcode labels, RFID tags are not susceptible to damage such as ripping and smearing.

Integrating RFID into the entire supply chain: maximum gain for omni-channel success
To reveal the true potential of RFID and generate maximum benefit for the retailer, RFID technology has to be built into the entire supply chain. RFID needs to be adopted by the manufacturer during the production and shipping out of the garment. The logistics team needs to adopt and use RFID for shipping and delivering goods at warehouses and stores, to optimize labor-intensive activities in the warehouse. In the store, associates need to use RFID to ensure item stocks are at optimum levels. Exception reports generated from POS and RFID data can be used by the retailer to reduce shrink.

Loss prevention, location tracking & counterfeiting
Traditional surveillance systems inform retailers every time they are breached, but not what exactly left the store. RFID systems provide protection from theft, as items will be tracked when leaving the store and exact product information can be sent directly to security staff. In addition to improving loss prevention, exit/employee door RFID reads enable tracking of store merchandise at the final point of exit, validating sales and preventing in-house fraud. Smart use of RFID technology enables retailers to track the precise movement of an item inside a store. Using a network of mounted sensors integrated with video data enables product tracking and brings down customer theft drastically.

RFID will provide retailers the ability to have a unique ID per item. Item-level RFID provides significant protection against counterfeit items in the case of product returns, exchanges and customer complaints. This will contribute majorly towards loss prevention, as it is possible to confirm whether a sold item being returned is the same, and not a fake one instead. Using sewn-in Printed Fabric Labels (PFL) can deter theft, and help identify fraud during merchandise return.

Inventory management and product tracking
The complexity in managing massive inventories at every link in the supply chain and providing actionable intelligence of products and shipping logistics is enormous. A collaborative effort from all businesses involved is required to successfully improve processes, meet customer demands, reduce costs, and increase profitability.

RFID tags will be printed and embedded into the apparel by the manufacturer. Work in progress can be tracked, and automated shipping information will be updated to the central systems. Once the items are shipped to warehouses, automated systems can trigger advance shipping notices by scanning the packages put out to the trucks.

RFID provides the intelligence necessary to maintain a small safety stock which equates to reductions in holding and labour costs, and increased efficiency in the distribution centre and in-store (backrooms). Bulk RFID scanning can be used to verify items while picking and packing, thus enabling fast scanning for inventory counts to schedule shipping and delivery. As compared to manual methods, RFID inventory counts are at least 60% faster.

Automated store floor replenishment can be enabled using RFID tags, and integrating POS to the backend inventory system. Based on items sold at the POS, businesses can have accurate, near-real-time intelligence into inventory records, and locate items in a facility at all times. Adopting item-level RFID can prevent inventory distortion and loss of sales, increase inventory accuracy up to 99% and maintain it at 95-99%. This level of accuracy enables retailers to increase on-floor availability by up to 30% and successfully implement Omni-Channel strategies.
With RFID, inventory counting can be done faster, more frequently and with greater accuracy, leading to significant reductions in out-of-stocks and improved revenue and gross margin.

Improving customer experience
RFID tags can help retailers track the customer’s shopping behaviour to identify why an item is not selling well. For example, if RFID data indicates that the item is taken to the fitting room but not converted to sale, the problem could be with the fit.

RFID readers fixed at transition doors track product flow between the stock and selling areas. Exception reports and patterns help managers improve customer experience by putting out the best products matching their needs.

RFID can improve the checkout time. Customers waiting in line can get extremely impatient. RFID devices can work even at a few feet from the scanner; if a bag full of purchased items comes under the scanner, it queries all the RFID devices and totals the purchases immediately. Checkout times can thus be improved over 40% using RFID. Delighted customers drive repeat business and will surely buy more from an RFID enabled customer, as opposed to a regular retailer. The ease of the process also encourages customers to increase their cart size, thereby enabling retailers to achieve top-line growth.

Conclusion
RFID technology allows retailers to better serve their customers online, on-the-go, and in-store. By ensuring the authenticity of products, streamlined in-store experience and sales processes, and improved inventory accuracy and theft prevention, it’s a win for customers, a win for the employees, and an even bigger win for the retailer’s bottom line. RFID enables transforming the Retail experience to a consistent consumer engagement platform both online and offline. RFID adoption is a true growth engine for an Omni-Channel retailer.

Overall, RFID will be a game changer in the next 4-5 years, with direct impact on the top line as well as bottom line.
(The author of the article, Jenson Joseph and Subhodip Bandyopadhyay are Advisor-Retail Practice & Practice Director and Head of Retail &
CPG at UST Global respectively.)
  • Published On May 25, 2017 at 02:28 PM IST
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