RFID technology in retail - reducing out-of-stocks

US-based fashion retailer American Apparel has reported a significant sales increase at its stores that have implemented RFID technology, according to RFID solutions provider Nordic ID.

Stacey Shulman, American Apparel’s VP of Technology, has suggested that the technology is helping reduce out-of-stocks and improve sales staff availability on the shop floor.

Over the last two years, American Apparel has been rolling out the technology across its global network of stores, and it comes at a time when many industry analysts are expecting RFID to become a major area of investment for the wider retail industry.

During RBTE 2014, which takes place at London's Earls Court between 11-12 March, visitors will have the opportunity to visit the In-store RFID Customer Experience Zone, which aims to provide retailers with an understanding of just what benefits RFID technology can bring to their respective companies.

Representatives from the zone's main sponsors ADT Tyco, Smartrac and Nordic+ (formerly Nordic ID UK) will be on hand to demonstrate RFID's multiple functions and advantages across all aspects of retail.

Scott Barlow, service delivery manager at Nordic+, answers some questions below on the role his company plays in the RFID process and why he sees the technology being central to the retail industry in the months ahead.

Why is RFID important for retailers?

From the retailers point of view RFID brings many benefits such as reliable and more accurate inventory records. Reduced stock out meaning when a customer comes in to buy an item – you have it for sale! Click & collect that works – meaning that you don’t have to ship stock in to meet orders and you can identify them in your store and then pick their order instantly meaning no waiting for the customer who has turned up to collect their order. The benefits list goes on but all RFID benefits will have an efficiency saving which brings costs savings and also a better customer experience.

What role does Nordic+ play in the RFID journey?

Nordic Plus provides pre-consultancy, architecture design and testing. We also provide the RFID readers be it fixed readers at goods-in/out points of a retail store such as reading goods coming in via the warehouse doors to individual tagged items being read as customers leave the store. Nordic Plus will also provide the hand-held readers that shop floor staff use to control and search inventory. RFID involves so many different facets such as software integration – into sales, CRM and different warehouse management systems. There are also the different types of tags items can have so Nordic Plus ensures all of the overall design can work with all of these different areas.

Which retailers are currently using RFID particularly well?

American Apparel – a Nordic Plus customer – had long used a barcode scanning system at point of sale to trigger a replenishment of inventory from the stockroom. But as it was a manual, paper-based system requiring physical counts, replenishment only occurred twice per week. Even so, it still involved manual item counts and an average of 240 man-hours per month. Naturally, there was also potential for human error.

To address this issue as well as to lift manufacturer is implementing an item-level RFID system. Now part way through a worldwide rollout of 280 locations, American Apparel is tracking items from advance shipping notice (ASN) receiving right through to point of sale.

In fact, sales have increased an average of 14% at stores already using RFID, with Stacey Shulman, American Apparel’s VP of Technology, saying: "It’s mostly due to a reduction in out-of-stocks and higher sales staff availability." Out-of-stocks have dropped to 1%, and internal shrinkage has also been reduced by an average of 55%. With approximately 12,000 SKUs and just one copy of each on the sales floor at a time, keeping out-of-stocks down to 1% is indeed an accomplishment. 

What are your predictions for RFID in retail in the year ahead?

We will see a massive uptake in RFID deployment in garment retail and also across full functions of the store from stock management and inventory control to also loss prevention and sales data.

What can retailers expect to gain from the In Store Customer RFID Experience at RBTE 2014?

Retailers who are interested to know more about RFID in retail can follow the lifecycle of an RFID tagged T-shirt from warehouse to point of sale witnessing all of the major integration points from type of tag, fixed and hand-held readers, programming a tag, the software integration as well as product search for click & collect and inventory checks.

Essential Retail has been profiling the use of RFID at the different stages of the retail supply chain by talking to the key sponsors of the RBTE In-store RFID Customer Experience Zone: Tyco Retail Solutions, Smartrac and Nordic+.