Nearly 15 billion pairs of shoes and 10 billion fashion apparel items ship from manufacturers every year. The ongoing costs for conducting manual inventory of these items, managing out-of-stocks, and preventing theft are enormous. Regardless, products must move—and that’s where item-level RFID tracking comes to the rescue.
In prior decades, most manufacturers and retail suppliers resided in North America. Today, the vast majority of apparel arrives from diverse geographical regions. This mix and match of sources and suppliers creates challenges that ripple throughout the supply chain. Manufactures must wait for their customers to verify the receipt of each shipment before seeing payment. Inventory is often miscounted or lost, and duplicate efforts create wastage. With perpetual inventories running at 60-70 percent, retailers remain hard pressed to make proactive business decisions for creating in-store sales lift.
To address these issues, apparel retailers have quietly begun adopting item-level RFID initiatives. RFID-enabled traceability can provide 100 percent inventory accuracy, giving retailers visibility into what is selling, where, and when—powerful metrics that marketing departments can use to create branding and customer loyalty campaigns. RFID tags contain ample data storage for a wide range of information and applications. For example, tags attached to apparel can contain three dimensions of information such as style, size, and color. Store associates can read RFID tags on garments hanging on a mobile rack, or read the tags at the point of sale. The ability to know that a specific item is available when a customer walks into the store helps ensure the sale, and enhances the customer experience.
The proof is in the results. Last year, the University of Arkansas Information Technology Research Institute completed a study to determine the business value of RFID item-level tagging for day-to-day operations at a major luxury retailer. The results demonstrated that overall inventory accuracy improved by more than 27 percent, understocks decreased by 21 percent, and overstocks decreased by 6 percent. The benefits of item-level tagging vary greatly depending on the retailer’s specific business and market. Specialty apparel retailers that design, source, and sell products bearing their own brands are realizing significant results such as a 14 percent sales lift, and a 90 percent reduction in the time required to conduct weekly inventory.
Achieving 100 percent inventory accuracy clearly drives improved inventory management, which meets a critical apparel industry initiative. Using RFID for inventory management immediately improves on-shelf availability of merchandise, and enables a wide range of customer-friendly applications such as smart checkout, smart fitting rooms, and product locating tools.