RFID technology solutions are still in the early adoption stage within the retail sector, but successful pilots in the apparel and grocery
verticals are raising awareness and interest in the impact the technology can have at an item level. Illustrating that interest, 79 percent of retailers surveyed place a high priority on in-store efficiency gains as a motivator for RFID implementation, according to Aberdeen’s latest report “Item-Level RFID Tagging in Retail.”
With benefits such as faster floor replenishment, enhanced inventory accuracy, better location visibility, and reduced theft --all of which have been spotlighted in recent pilot rollouts-- many retailers are taking a second look at the benefits of using RFID technology at the item-level.
The RFID movement in retail seemed to lose steam after Wal-Mart backed off its aggressive mandate requiring all of their suppliers to ship their products with RFID tags at the case and palette level. However, it has recently gained momentum again, particularly in the apparel sector, when American Apparel paved the way two years ago with a monumental item-level RFID pilot program that now sets the bar for the future of retail.
The vertically integrated manufacturer, distributor and retailer, based in downtown Los Angeles, CA, accomplished their RFID endeavor by tagging items at the company’s manufacturing facility. The company, which operates more than 285 retail stores in 20 countries, utilized the item level tags to track the movement of stock from the back room to the sales floor, as well monitor the real-time flow of inventory at the POS. To capture this item-level intelligence, American Apparel deployed the Motorola MC9090-G handheld RFID reader and Motorola XR440 fixed readers in one of their NYC stores.
Met with marked success, the program not only increased inventory accuracy to an astounding 99% (up from 70%-75% accuracy pre-RFID), but significantly reduced work-hours required for restocking (from 30 pre-RFID, to under 4 hours post-RFID), and greatly increased customer satisfaction by having a better handle on stock replenishment.
With such a clear return on investment for the cutting-edge apparel store, American Apparel has since deployed RFID tracking systems at 17 stores in the New York area, in addition to the Santa Monica, California store, and the chain has plans to eventually unveil the RFID solution in all of its U.S. stores. “RFID is the future of retail because it is a better way of managing inventory, period,” said Zander Livingston, Director of RFID for American Apparel.
Marshall Kay, Principal at RFID Sherpas LLC, a consulting practice focused exclusively on the practical application of RFID in stores and other retail operating environments, said the success of American Apparel is also being achieved by other retailers. “Item-level RFID deployments are delivering higher sales, with increases ranging from 5-20% depending on the caliber of retail execution and the range of RFID applications deployed,” Kay said.
But even beyond the sales rack, RFID technology continues to be widely embraced by non-apparel retail stores, including drugstore giant Walgreen’s (which is reportedly using RFID technology to manage promotional displays), as well as consumer packaged goods (CPG) companies that are using it to improve warehouse operations.
In April 2010, Intermec Inc. announced that Mission Foods, one of the nation's largest tortilla manufacturers, deployed a pilot program using Intermec RFID technology to improve its warehouse operations. To enhance the tracking of its reusable containers, Mission Foods' pilot consisted of deploying Intermec IF61 readers, along with Intermec antennas, labels and PM4i printers across three plants, with each plant processing 20,000 containers daily.
Prior to the deployment, Mission Foods replaced nearly all of its carton boxes and returnable plastics containers (RPCs), resulting in added direct costs.
"This a prime example of the quick and measurable impact RFID solutions can have for any customer with returnable transport items," said Phyllis Turner-Brim, director of RFID Strategy and Licensing at Intermec.
