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Where, When, How Much: Using RFID to Keep Inventory in Check

Apparel retailers can develop headline-generating experiential environments, capture a million eyeballs via quirky social campaigns, or be the first to drop the latest trend, but they won’t get very far without their inventory management in check.

Inventory accuracy has the capacity to make or break any retailer. With ramifications felt on everything from sales to sustainability, having visibility into one’s stock is paramount for profitability.

At the NRF Big Show in New York City last week, RFID technology was shown far and wide as a solution promising to help apparel retailers win at omnichannel selling. With the ability to capture information from a large number of products quickly—and from further distances than required by legacy tech like bar code readers—merchants can receive an accurate view into their stock at any location. Having this information at their fingertips, RFID companies ascertained, retailers can boost margins, customer satisfaction and engagement.

To be sure, inventory management is much more chaotic than it used to be. “It’s not as simple as it’s either in the warehouse or it’s in the store,” said Ashley Burkle, senior manager of retail solutions at Impinj, a provider of RFID solutions. “There’s a lot more going on, and the supply chain isn’t linear anymore.”

RFID proponents are keen on citing research from Auburn University’s RFID Lab that found inventory level accuracy for retailers not using RFID hovered around an average of 63 percent, while those that did deploy the technology saw levels increase to 95 percent.

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With accuracy rates that high, said Burkle, RFID can ensure retailers deliver a more satisfying BOPIS experience, as well as increase their conversion rates when consumers add on purchases upon retrieval. “It actually gives you a leg up when it comes to buy online, pick up in-store by just knowing what you have, where you have it and where it’s moving from,” she added.

Beyond providing this transparency to consumers, Luke Sinclair, Detego marketing manager, said, sellers can better use their stores as distribution centers. Detego, which facilitates RFID retail services via a unified cloud platform, is exploring the use of RFID in tandem with machine learning to automate planograms for retailers. By tying these technologies together, the planograms will optimize the sizes and styles that should be represented on the sales floor, Sinclair said, providing efficient and automated item-level visibility.

Bill Toney, vice president of global RFID market development at Avery Dennison, noted that these visibility benefits can include cost savings as well. “Instead of a consumer getting three different shipments from multiple stores, they get one shipment,” he said, “which obviously is good for the retailer. It drives down logistics costs [and] labor costs.”

Savings can also be realized by eliminating the need for safety stock. Omnichannel retailers that build safety stock into their orders do so in order to ship to customers at speed, but they’re often stuck with inventory and thus markdowns at the end of the season. “RFID allows you to unlock all that inventory that you have hidden and make sure that you’re driving as much opportunity you have at your store,” Toney noted.

Beyond keen inventory management, RFID proponents cite the technology’s potential for customer engagement. For example, consumers can scan items via their smartphones using the near field communication (NFC) version of RFID, said Philip Calderbank, a consultant at BSN, which makes RFID UHF labels for apparel. So someone curious about high-end sneakers could learn more about them or watch a YouTube video featuring the product, he said. This type of usage can grow in-store engagement and drive excitement (and sales).

“If you look at an Apple store, it’s always busy,” Calderbank said. “Why is it busy? Because people like playing on the toys. It’s consumer engagement. You go into some stores and they look bored, stale, old—there’s nothing to play with. If you can start playing with your phone and [tapping] items, it makes the whole experience of visiting a shopping mall more interesting. That’s going to be driven by RFID.”

Likewise, as more consumers become concerned about sustainable manufacturing, shoppers can ascertain, with their smartphone in a store, whether an item was made responsibly, said Tony Ceder, vice president at packaging manufacturer Charming Trim. Whereas consumers were once preoccupied with size and fit, today’s shoppers want to know about the fiber content and humanitarian details of their clothing, and companies can provide these details via NFC tags.

“We want a story about what we’re buying today,” said Ceder. “There’s more interest in understanding how it was made and where it was made.”

While RFID was once saddled by high prices and performance issues, implementation costs have dropped to much more reasonable levels, and usage around problematic materials have been resolved, according to the manufacturers Sourcing Journal spoke with. The average cost of an RFID label today is less than 4 cents, said Calderbank, a steep drop from the 20 cents or more per label 10 years ago.

And while some of the potential surrounding RFID can extend into almost gimmicky retail—think selfie mirrors—having the right amount of stock on hand, in the right places, at the right times, is the cornerstone of retail customer centricity.