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Focus: RFID and Automated Identification and Data Collection (AIDC)

Feature Article from Our RFID and AIDC Subject Area - See All

From SCDigest's OnTarget e-Magazine

Aug. 10 , 2011

RFID and Auto ID News: Is Item-Level Apparel Tagging Going Strong, Fading, or Just Catching Its Breath? WalMart Expanding Categories to Non-Apparel

 

Macy's Says it will Wait Until More Retailers Agree to Require Tagging; Just a Natural Lull Between Phases of Very Active Program, says one Expert

 

SCDigest Editorial Staff

 

After the trials and tribulations of RFID/EPC programs in the consumer goods to retail value chain, leading ultimately to WalMart's unsuccessful program and similar disappointments at such retailers as UK's Tesco and Germany's Metro Group, it appeared that in the past two years the RFID industry had finally found its white knight in the form of item-level tagging in apparel, shoes and other soft goods categories.

SCDigest Says:

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Macy's doesn't want to be the "bad guy" that requires the vendor investment first that other retailers can later leverage by jumping on the bandwagon after Macy's does the dirty work.

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Here the primary driver is not so much greater efficiencies in the full supply chain but rather improvements in in-store management of the inventory, such as being able to do cycle accounts in just seconds and performing them far more accurately than manual counting or bar code scanning can deliver. Item-level systems can also help find misplaced inventory, and potentially be pair with electronic article surveillance (EAS) technology that provides better control of theft by identifying specifically which items have been stolen as they pass through readers at store exits.

This value, demonstrated in a number of tests and pilots, comes in large part because apparel items are on racks and shelves with other very similar items that may only differ in size and color. Even different styles can look quite similar. Additionally, the inventory levels of a given style, color size can be very low at a given store, especially after a few days/weeks on the selling floor, leading to lost sales if the item is out of stock due to inaccurate perpetual inventory counts or it has been misplaced on the floor, is sitting in the changing room, etc.

In the US, American Apparel stores largely got the ball rolling in this area several years ago, with pilots and then an on-going rollout in its vertically integrated supply chain, meaning it contracts out for its own store-branded merchandise, reducing some (but not all) of the issues companies that buy from hundreds of different suppliers might face in terms of resistance from its closed-loop supply chain.

Then last summer, WalMart jumped in the RFID water again, announcing an item-level tagging initiative that clearly showed the company had learned some lessons from its previous debacle, focusing on a limited set of apparel SKUs (jeans and men's underwear) and a clearly more measured rollout with a clear value proposition.

Many have lately sensed, however, that there was something of a slowdown in the progress of item level program rollouts, causing some to question whether the previous rise and then disappointment seen in consumer goods to retail was going to be repeated.

Those worries were fueled this week when it was reported that Macy's, which has been very active both as a company and at a retail industry level in this item-level initiative, said it was going to stay in a holding pattern until apparel retailers as a group all jump in together and also develop a set of process and technology standards so that vendors can leverage their required investments across retailers and have a relatively common set of requirements to work from across store chains.

Despite being very pleased with its pilot efforts in tracking not only apparel and footwear but furniture and bedding, Bill Connell, Macy's senior vice president of logistics and operations, said this week that "We have stated that as part of the RFID Initiative, we have an eye toward industry adoption by mid-2012 and we fully expect to be an early mover along that timeline. Industry adoption means everybody agreeing to do it, and once that is agreed to, we intend to be an early mover."

In other words, Macy's doesn't want to be the "bad guy" that requires the vendor investment first that other retailers can later leverage by jumping on the bandwagon after Macy's does the dirty work.

But SCDigest sources have said that despite what may appear to be a slow down, most known retailer item-level programs are in fact gearing up for subsequent phases, not pulling back. In fact, a manager at one consumer electronics chain told us this week that not only is WalMart gearing up to require item-level tagging from another group of suppliers, but that this next wave is going to include not only another set of apparel SKUs in the women's intimates area, but also non-apparel SKUs in the tires and electronics categories as well, high value items for which WalMart believes better store management of inventory will also provide a nice payback.

(RFID and AIDC Story Continued Below)


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The source told us that this new wave of vendors will be required to deliver tagged product in March, 2012.

Since WalMart has already deployed item-level reading infrastructure in all of its US stores, based on handheld rather than fixed readers, rolling out RFID tracking to other SKU categories is a relatively easy and inexpensive task.

Dean Frew, CEO of RFID solution provider Xterprise, says there may be a bit of a brief lull going on between phases of rollouts at different retailers, but that overall the momentum for item-level RFID tagging in apparel is very strong. Xterprise is the technology provider for the American Apparel store rollout.

"For the big box and department store segments, we have seen some slight delays for the next wave of suppliers that these retailers are requiring to item-level tag," Frew says. "They appear to be doing it for reasonable technology supply reasons. We are not seeing any retailer “backing up” and conversely we are seeing a number of specialty retailers accelerating plans."

Dean adds that "These are new systems that are being deployed at retailers for the first time, and bringing disruptive business results, so reasonable discipline in the rollout pace should be expected as the programs move forward."

Dean believes the market will continue to see item-level systems moving up the technology priority list at a growing number of retailers not only at apparel-focused chains, but in sporting goods and electronics retailers as well.

SCDigest notes it is interesting that bar coding in consumer goods to retail also started at the item-level with UPC tagging before moving back up the broader supply chain based on pallet/carton tagging.

Will history repeat itself?

What can you add to the status of item-level tagging in retail? Do you see it moving out to other areas besides apparel soon? Will history repeat itself? Let us know your thoughts at the Feedback button below.

 

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