Why RFID is Always in Fashion

Fashion retailers make it their business to stay on top of the latest trends, keenly understand their customer's preferences, and optimize the in-store experience to deliver exceptional service.

To maintain these high standards and meet the expectations of today's shoppers, many fashion-forward retailers are evaluating their in-store technologies to maximize merchandise performance, drive increased margin, sell-through and turn, and keep their discerning customers loyal. RFID, historically considered only suitable as a supply chain solution useful for basic replenishable goods, is emerging as a viable and essential solution for today's fashion retailers.

In fact, according to Pablo Isla, president of apparel retailer Inditex, the implementation of RFID is "one of the most significant changes in how the Group's stores operate." As the leader of one of the world's largest fashion retailers, with eight brands and more than 6,390 stores throughout the world, Isla's perspective underscores the value of RFID for today's apparel retailers. RFID-based intelligence can empower a merchant, provide a better shopping experience, and support an omnichannel strategy to meet the evolving needs of even the most discriminating shoppers.

Gaining clear visibility and ensuring inventory accuracy across the entire enterprise is critical to success in today's retail environment. Unlike their fellow counterparts in the retail market, apparel retailers manage trendy, seasonal and replenishable merchandise, dealing with highly complex SKUs, quick sell-through speed, seasonal buying patterns, and high potential for theft. Because of this, they have just one chance to get their inventory allocation right to avoid lost sales, shrink, overstocks and costly markdowns.

Without accurate visibility into historical and real-time inventory intelligence – sales and on-hand quantities by size, color, and style – these retailers struggle to place appropriate merchandise orders and store allocation plans, and risk significant revenue loss by tying up open-to-buy inventory dollars in merchandise that is sitting and not selling. Moreover, without filling walls and fixtures with the right assortment of styles, colors, and sizes and understanding specific item availability with near certainty, fashion retailers have the potential to damage the shopper experience and overall brand perception.

At its most basic function, RFID empowers an apparel retailer to execute at the SKU and fixture level, ensuring the right items are in the right place at the right time – the foundation of retail excellence. With RFID-enabled style- and SKU-accurate visibility, merchants are equipped to develop more precise merchandise plans and better tailor product assortments by shopper demographics and store location. Getting it right first results in sustained profit margins, quick merchandise sell through, limited markdowns, and happy, stylish customers. This insight enables retailers to make their inventory productive and to position it when and where customers want it, with the opportunity to further engage shoppers in a highly personal and profitable way.

RFID is a critical enabler to enriching the customer experience and impressing even the savviest shopper. For example, over time, retailers can augment RFID-powered insight and recommend items directly to in-store shoppers with precision, based on what is available in the store. Retailers may also consider implementing display kiosks on the sales floor and in the dressing room where an RFID tag can trigger an interaction with shopper to provide more product information, or complementary additional items, which help to educate the customer, enrich the experience, and drive sales. To reach a shopper in a way that is meaningful spells success for any fashion retailer committed to superior customer service.

By leveraging RFID, Macy's has gained unprecedented real-time inventory visibility to support its strategic omnichannel objectives. Having this level of insight allows the retailer to leverage its full-store assortments and confidently provide an online selection of fashionable styles, colors and sizes available for order without the need for additional "safety stock" to cover for inventory inaccuracy.

With the ability to leverage inventory in all stores for multichannel fulfillment, Macy's is able to offer the latest buy-online-and-pick-up-in-store option to its customers. Relying on RFID, Macy's is also achieving operational efficiencies through improved inventory processes and better controls for reducing shrink. The retailer is optimizing its inventory investment and maximizing sales and margins, proving the value of RFID extend beyond the traditional use cases in replenishable goods, and underscoring the value for fashion retailers today.

The great fashion icon Karl Lagerfeld was quoted as saying, "I am a fashion person, and fashion is not only about clothes -- it's about all kinds of change." To stay competitive in today's fast-moving fashion world means embracing change and considering the proven value of technology such as RFID to improve the customer shopping experience, maximize merchandise performance and increase profitability. Those apparel retailers that are not considering RFID as part of their store environment risk being left behind, struggling to fulfill the demands (and secure the pocketbooks!) of today's discriminating style-conscious customers.

Randy Dunn is director of global sales & professional services for Tyco Retail Solutions.
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