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Comment: How to prove the business case of RFID

RFID adoption continues to gain pace in apparel retail. In the last year Thomas Pink, Gieves & Hawkes and Lululemon have released details of their RFID pilots, while River Island and Decathlon continued to expand their RFID roll outs to hundreds of stores. As we edge closer to the tipping point, RFID thought leader, Mark Roberti, has predicted 2018 will be the year RFID takes off with 57% of US apparel retailers already implementing the technology.

In the UK, most apparel retailers acknowledge it’s a case of ‘when’ rather than ‘if’ they’ll adopt the technology – but while many are thinking about RFID, a much smaller number are taking the plunge to implement. So what’s stopping them? RFID is a transformational technology with many applications and benefits. But, when a technology cuts across so many areas it can be difficult to measure its value.  

Most apparel retailers adopt RFID to improve their inventory management. With rising operating costs, new omnichannel processes and excessive discounts - all driving retailers to improve visibility and control of their working capital - there’s a clear business need for the technology.

The ease and speed at which you can count stock using RFID means retailers can conduct stock takes on a weekly, daily or perpetual basis to improve stock accuracy. And stock accuracy in apparel is an issue. On average, stock records are only 63% accurate - meaning for every three to four items you think are on the shop floor, one is actually missing.

Macy’s, John Lewis and Walmart are some of the highest profile retailers to now have stock accuracy of 95-99% through the use of RFID. This is an impressive statistic but accuracy alone doesn’t drive value, instead it’s how they use the accurate data to inform business decisions and improve inventory range, allocation and quantities.

To make the business benefits of RFID truly tangible and prove its effectiveness, there are several KPIs that retailers can evaluate:

To identify the potential value of RFID for your business, GS1 UK has built an RFID ROI calculator. Developed in conjunction with RFID Journal, the calculator gives a basic understanding of the indicative costs and potential benefits you are likely to incur when implementing RFID technology. Click here to access it for free.

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