By  on November 1, 2010

It’s finally happening — the apparel industry is moving to adopt radio frequency identification at retail to reduce out of stocks, a group of retailers and brands said Monday.

Wal-Mart previously said it will move to item-level tagging, and retailers such as American Apparel and Nine West have revealed they are testing the technology, but this is the first time an industry group has publicly said it plans to use RFID tags in stores for tracking individual items of apparel.

The technology can reduce out of stocks by as much as 50 percent.

“We believe it is time for the industry to come together to advance the use of this technology throughout the retail supply chain,” said Peter Longo, president of logistics and operations at Macy’s Inc. “We are excited about the business improvement and customer satisfaction opportunities that this industry-led initiative affords us.”

Retailers and brands participating in the initiative include Macy’s Inc., Dillard’s, Kohl’s, Wal-Mart, J.C. Penney Co. Inc., Conair, JonesApparel Group Inc., Li & Fung, VF Corp., Jockey and Levi Strauss & Co. American Apparel, Bloomingdale’s and Banana Republic have previously said they are testing the technology. Marks & Spencer, Tesco, Metro, Carrefour, Misukoshki and Throttleman’s also use RFID.

Adoption has come more slowly than anticipated, partly because of the way the initial Wal-Mart mandate was crafted, and also because of public misperceptions about privacy risks posed by the technology. In 2003, Wal-Mart required suppliers to tag every pallet and case, but it had not yet tested the business case for the technology. That approach proved less useful than tagging certain key individual items, such as jeans, for a variety of reasons, including that Wal-Mart already had a sophisticated system in place for tracking every shipment, and RFID does not work with metal and liquid.

Consumer groups have raised concerns the tags could be used by the government or others to track people at any time and in any place. But the tags contain no personal data, are difficult to read from a distance and can easily be disabled by removing them or covering the tags with tin foil.

Retailers are still sensitive to publicity on the subject, and none would give individual interviews to discuss the specifics of their rollout plans, referring inquiries to industry groups such as AAFA and NRF.

Nonetheless, participants have indicated they intend to deploy the technology beyond tests, possibly within the next few months, if they haven’t already. Most retailers will publicly disclose their use of the technology with small signs in each store where RFID is in use, as per industry guidelines.

Other benefits of the technology include inventory accuracy of more than 95 percent versus an average of 62 percent without it, faster taking of inventory, improved security, sales increases and happier customers.

“Item-level tagging is definitely where things are heading, and we are already seeing the benefits across the supply chain,” said Paul Arguin, director of technology and engineering, Conair.

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