The apparel market has undergone dramatic transformations over the past four decades, both in terms of the size and scope of its manufacturing base and in the technologies used to move the industry forward. Yet even more profound changes have occurred in the expectations of the consumers who sustain this massive and ever-expanding industry.
Flashback to the '60s and early '70s. Consumers were highly selective in their buying habits, choosing one or two outfits for special occasions and preferring to repair before replacing. Distribution channels catered to the whole family and most clothes were manufactured locally. In short, consumers purchased less often but spent a larger overall proportion of their income on clothing. Back then, the first mass-market brands were still to appear on the scene, volumes were much smaller and lead times significantly longer.
Much more than a simple label
The global nature of the apparel supply chain, with the vast majority of manufacturing in Asia and widespread distribution in markets in Europe and America, provides enormous logistical challenges to apparel manufacturers. In response to these new complexities, the labels attached to products have evolved into much more than the simple price information ticket or brand tag of the past: Apparel labels now contain the information that helps to move millions of garments daily across the world and have become a single source for branding, identification and protection. Attaching these advanced labels at point of manufacture is the only way to ensure consistent branding and ticketing information - including price and other necessary product-related information - worldwide and in several languages and currencies.
Today's labels also provide the answer to another aspect of great concern to apparel retailers: shrink caused by theft. The growth of the Internet has opened up new avenues for resale, causing concerns about the impact that Organized Retail Crime (ORC) is having across a long and vulnerable supply chain. Meanwhile, the explosion in consumer choice for attractive branded goods is encouraging a growth in opportunistic theft in stores. The most recent Global Retail Theft Barometer, produced by the Centre for Retail Research, indicated that the cost of shrink from theft for the apparel industry represented 1.84 percent of retail sales. According to the report, fashion accessories were particularly at risk from theft, followed by women's dresses, shirts and lingerie. The incorporation of effective Electronic Article Surveillance (EAS) circuits within labels to protect products in store continues to be an essential means of managing shrink in a complex retail environment.
Prioritizing the consumer
Technological innovations have helped apparel manufacturers and retailers make the shift toward a new global reality where customer choice and service are not just priorities, they are the difference between success and failure in a highly competitive market. Today, the apparel industry continues to change, faster than ever. The job of today's solutions providers to the global apparel industry is to keep innovating to provide the tools, ideas and services that will continue to ensure that their clients can keep responding to these new challenges and opportunities, helping them to drive growth over the next 40 years.
Facing up to a new economic climate
The current economic climate has been particularly harsh for apparel retailers, which now find themselves fighting over a shrinking consumer base. With shoppers cutting back on their expenses, retailers must have the merchandise that customers want when they come into the shop. Every sales opportunity is vital. Added to that, the tightening of the credit markets means that retailers are facing higher inventory costs: they must sell what is on the shelves and can no longer afford to be complacent about over-stocking.
Aside from these in-store challenges, the complex global supply chain is providing another potential hurdle for apparel retailers. Increasing outsourcing leads to more potential packing and shipping errors and poor visibility across the supply chain, and a lack of clear inventory data in store means that retailers are often unsure if they are ready to adequately respond to the demands of today's discerning consumer. One word sums up the solution to the fundamental challenges of outsourced manufacturing, supply chain complexity, and in-store operations: visibility.
Merchandise visibility represents a step change for apparel retailers: A comprehensive supply chain and in-store solution now exists that enables retailers to improve operations, sales and margins. Retailers can now gain unprecedented real-time merchandise visibility, from source to store.
Merchandise visibility offers an end-to-end solution for closed-loop apparel retailers. Using RFID technology and software, retailers can know the exact inventory situation in their stores, and "see" what articles are on the shelf and what needs to be re-stocked, while responding instantly to the needs of consumers so that they will never miss another sales opportunity again. Retailers can now guarantee that popular lines are always in stock, anticipating and adapting to demand to ensure, for example, that consumers find the right color and size at the precise moment they need it.
The key words are efficiency and sales. Studies of a merchandise visibility pilot project carried out by Checkpoint Systems with a major European retailer demonstrated that replenishment of out-of-stock items was improved by up to 37 percent, shipping errors were virtually eliminated and, overall, sales improved by 7.6 percent. Similar results have been found in several apparel retail pilots. It is not surprising that every closed-loop apparel manufacturer has taken note and started to think about what the merchandise visibility-enabled store of the future will look like.
It is important to understand the synergies that exist between effective loss prevention, better merchandising and enhanced consumer satisfaction. Every point of this "golden triangle" of benefits needs to be in place for retailers to grow their businesses, by being able to expand their range of merchandise, improve their in-store marketing strategies and keep winning new consumers by constantly working to provide a better service, and a more open and friendly shopping environment.
Dr. Bill C. Hardgrave is director of the RFID Research Center at the University of Arkansas.