Business Case

Depeche Mode is French for 'fast fashion' and it's extremely accurate. In the retail fashion industry, success is based on the ability to put the latest style in the correct size in the customer’s hand at the right time. Although it sounds simple, it's more difficult to do than you'd expect. In this video, our experts travel from San Francisco to Hong Kong to Paris to show you how RFID technology benefits the retail fashion industry.

The Business Challenges for Retail Fashion

Fashion is a perishable commodity where trends change overnight, making it difficult to ultimately predict duration and demand. Ordering too much product translates into increased capital expenses that can erode a retailer’s bottom line, while ordering too little can lead to missed opportunities and lost sales. Unlike other retail segments where items have a set location on the shelves, items do not stay in one spot. Inventory is constantly on the move between the rack and the dressing room throughout the day, often causing a false out-of-stock situation and a lost sale when the size a customer may need is in the dressing room waiting to be re-stocked. And keeping an accurate inventory is difficult - and costly - further compounding the ability to ensure the right item is available for your customers at the point of decision.

The financial impact associated with these challenges is staggering to fashion retailers. The Harvard Business School found that eight percent of all retail items are out-of-stock at any given time, costing the top 100 retailers an estimated $69 billion annually. Lack of inventory visibility often results in up to 65 percent inaccuracy in inventory counting, making accurate ordering an even more difficult task. And the very nature of high value merchandise that is openly accessible to customers increases the opportunities for theft.

How RFID Technology benefits Retailers

The right technology can help fashion retailers address these age-old issues. By deploying RFID, fashion retailers can achieve the real-time inventory visibility required to improve the many aspects of inventory mgt - with very little effort. For example, a complete manual cycle count may often take days - but an employee equipped with a handheld RFID reader or a mobile RFID reader on a cart can take a complete inventory in minutes. In a market characterized by seasonal product with a short shelf life, real-time inventory visibility can create real business advantage. Ordering is improved through the ‘right now’ ability to see what is truly in stock, enabling more rapid reaction to inventory demand and stocking levels. High levels of ‘safety stock’ - excess inventory ordered to protect against out-of-stocks - can be reduced or eliminated. Lost sales due to the inability to locate inventory are eliminated, since even items in dressing rooms are visible. Since each product in a specific shipment has a unique identifier, quality assurance and counterfeit prevention are enhanced - improved accuracy in picking and packing operations translates into the proper fulfillment of purchase orders. Imitation products are easy to spot. Missing shipments that can impact the assortment on your shelves are quickly identified. And the new level of inventory visibility improves loss prevention measures by providing an additional layer of intelligence to existing, proven technologies such as Electronic Article Surveillance (EAS).

Point of manufacture to point of sale - design to destination/ rack

Several specialty fashion retailers have deployed successful pilot and first-stage implementations of RFID applications,
yielding impressive business results:

  • Reduced out-of-stocks by 50 percent, increased customer satisfaction and sales
  • Volumes - and profits
  • 15 to 20 percent reduction in restocking efforts, reducing labor costs
  • 90 percent reduction in labor associated with inventory counts
  • Reduction in receipt of counterfeit items
  • Reduced employee theft and shoplifting through improved monitoring of inventory movement
  • Faster receiving and inbound processing - fewer delays in processing seasonal items and faster from-dock-to stock times for improved profit margins

While consumer packaged goods (CPG) RFID applications began with pallet and case tagging to improve supply chain visibility, industry experts believe that fashion retailers can realize the largest and immediate returns by moving straight to item level tagging with a customer-facing focus. RFID tags applied to each item at the point of manufacture enable the automated and granular tracking of each item from creation to purchase.

As a result, orders are easily tracked all the way through the supply chain, order processing at the distribution level is more efficient, counterfeit goods inserted anywhere in the supply chain are easy to identify, and granular visibility of items in the retail store ensure that the right item is available at the right time to increase sales - and protect profitability.

Copyright © 2015
The International RFID Business Association (RFIDba), All Rights Reserved.