In preparation for what seems to have become an annual pilgramage to RFID Journal Live!, I have already filled my calendar for the conference dates, April 12-14th. I am honestly not quite sure what to expect this year in terms of retail attendance. NRF VICS conference attendance would suggest that retailers will show up in droves, but I am not convinced that they will.
In preparation for what seems to have become an annual pilgramage to RFID Journal Live!, I have already filled my calendar for the conference dates, April 12-14th. I am honestly not quite sure what to expect this year in terms of retail attendance. NRF VICS conference attendance would suggest that retailers will show up in droves, but I am not convinced that they will.
What to expect at RFIDJournal Live!
I suspect that many of the retailers who showed up at the VICS conference in January, if they were ready to explore RFID, have already started talking to vendors about solutions. Perhaps they will surprise me. It is also going to be interesting to see if the suppliers that are required to comply with Macy's mandate will show up.
I have to say I am convinced that the benefits are real for retailers, particularly vertically integrated retailers, who can tag all products and roll out store by store, rather than having to go through the painstaking process of assisting suppliers, one by one. I am also convinced that RFID enables leaner store inventories, without sacrificing lost sales.
That said, large retailers, like Macy's are more prescriptive about tagging and packaging processes, than counterparts in the consumer products retail arena. If source tagging has been a challenge for apparel and footwear products, vendors including Avery Dennison, Tagsys, Tyco Retail Solutions and Checkpoint promise to remove these barriers to implementation. In a pre-briefing about the new Monza 5 chip and STP source tagging technology, Impinj described how they can enable encoding of up to 1750 tags/minute for both inline and bulk encoding solutions. A real demonstration of how this technology has evolved and improved, write performance on the Monza 5 is almost as good as read performance of Monza 3 technology (typically read performance is much better). I am also looking forward to seeing a demonstration of Tagsys's new FiTS (Fashion Item Tracking System), its commercial off-the-shelf, end-to-end supply chain system for apparel and fashion businesses. Tagsys says that RFID enabled FiTS will provide end-to-end visibility from manufacturing, through the distribution center, and to the retail floor.
Potential challenges
The biggest hurdle isn't finding technology that works - the biggest challenge is reengineering and implementing processes that maximize the value and encourage industry and more specifically, user adoption. What troubles me is the "hype" that I have seen reemerge. Expectations of rocketing RFID technology sales in 2011 are unrealistic at best. Implementations don't happen overnight. It will take time for evaluations, pilots, and business case analysis, not to mention for capital budget approvals. I remarked in previous reports that department store and apparel and footwear specialty retailers were going about RFID initiatives correctly this time around and that's precisely why they are going to be successful. If retailers open their checkbooks without doing the appropriate due diligence, more projects will miss the mark, and the industry will suffer.
An update on American Apparel's implementation
That said, several retailers have launched aggressive projects. One of these retailers, American Apparel, who I had the pleasure of visiting with at their corporate headquarters last week, is continuing to roll out RFID to stores. The technologies currently deployed in RFID enabled stores are primarily comprised a mix of Xterprise, Tyco Retail Solutions, Motorola and Avery Dennison solutions. Their continued deployment is based on quantified benefits and very fast return on investment - full payback in 6 months. American Apparel is realizing an average of 50% reduction in shrink when they implement RFID and EAS in tandem. Graphs that compare out of stocks in stores with RFID with those without demonstrate 15-20% improvements (my estimate). That amounts to much more merchandise available for sale, and ultimately a happier, more loyal customer and a happier, more stable workforce.
Some of the less talked about benefits are an array of reports that help store associates and management, manage apparent issues in stores, such as stock that went missing just yesterday, or front of store stock replenishment issues. This raises a very important issue as many of the benefits of RFID are not known and certainly not fully realized and proven until a retailer's program has matured.
The benefits analysis that American Apparel shared with me a couple of years ago doesn't match up exactly to the benefits that they have measured today. Their return is even faster now that they fully understand the improvement in shrink. Now, they are talking about tagging fabric, cases, and trollies in their manufacturing and distribution operations. This is a great example of a well thought out project, that is progressing as fast as time and money allows.
Stacey Shulman, the Vice President, Technology for American Apparel, told me that "every item counts". Truer words could not be spoken as we see retailers looking for more efficiency in everything they do. As consumer shopping patterns increasingly move online for a growing number of products, the need for lean store inventories will continue to grow, and this only reinforces a retailer's need to make every item count!
Like, I said, my calendar is pretty full next week at RFID Journal LIVE! With meetings with retailers and technology vendors, but please do reach out: for retailers, if you would like to discuss leveraging RFID in your business; or for technology vendors, if you would like to make sure I have been briefed fully on your latest capabilities.
By Leslie Hand, Research Director, Global Retail Insights (Source: IDC Retail Insights)