August 12, 2008
Jones Apparel Group in Item-Level RFID Test
Jones Apparel Group announced it has begun a pilot program in Nine West stores to test radio frequency identification (RFID) technology at the item level. The company is seeking to determine what impact item level tracking will have on productivity, customer service and inventory management.
“We are eager to begin this test to explore the benefits that RFID can provide in our retail footwear locations,” said Norm Veit, Executive Vice President, MIS at Jones, in a press release. “RFID has interested us for some time, and we believe it has reached the point where launching a pilot program of this nature makes sense. We are also pleased to be working with our chosen partners on this project, and we look forward to the support and expertise we are confident they will provide.”
Sergio Prosperino, senior vice president, store operations at Nine West, said, “We are intrigued by the prospect of enhanced inventory visibility, and we think this can be of real value to our customers and store associates.”
Jones is working with Avery Dennison, inCode Wireless, Motorola’s Enterprise Mobility Business and Vue Technology as technology partners in the test.
The Jones test follows in the steps of American Apparel, which tagged all items sold in its New York City stores last November. According to a report on the STORES magazine website, the company is expanding item-level tagging to its locations in the New York area and another store in Santa Monica, Cal. It will follow by eventually rolling out the technology to all its North American locations.
Zander Livingston, who led the RFID test for American Apparel, believes that it’s time to go for it when it comes to item level tagging. “We hear about a lot of people saying that they’re waiting for the costs [of RFID] to come down, but I think that’s just a mask,” he said. “It’s not that expensive; I think really it’s about waiting to see if somebody else steps up first.”
Discussion Questions: Is the time right for RFID at the item level? What do you think Jones Apparel and Nine West will discover from the testing the companies will do? Is the tag cost impediment still a major issue preventing more widespread adoption of RFID or are there other more serious factors getting in the way?
BrainTrust
Recent Discussions
Discussion Questions
Poll
RFID continues to be a terrific opportunity for certain items, suppliers, and retailers but is not yet ready for massive rollout on every SKU. This test will verify that you can track and manage inventory more effectively on high retail, average/low turn clothing.
The technology makes the most sense for high retail/high turn items like razor blades, laundry detergents, cosmetics, etc, where the cost of the tag and set up is easily absorbed into the item P&L and is offset by reduced inventories and higher turns.
Now, how do you translate that item P&L into very high turn items like a 50 cent can of Viennas or a can of Pringles? RFID is still cost prohibitive for many SKUs, but clearly makes great sense for the right items which center on that item’s P&L.
RFID has potential to enable better merchandising visibility, but only where it is wrapped into store-level compliance disciplines. These may be enabled by broader technology that incorporates the RFID signal into the total picture of shelf conditions.
In other words, I continue to maintain that RFID is a solution element, not a solution. When it is deployed as a signaling mechanism within system of superior store level practices, it has potential to give retailers an edge by triggering faster merchandising responses. If not backed up by an In-Store Implementation methodology, RFID is merely a tool that automates measurement of last month’s mistakes.
The MediaCart system is built on passive RFID using shelf labels. The discussion here is rightly focusing on inventory management, but there is a good deal more that can be done with the data. Think how long it took from when scanners were introduced until dunnhumby assisted Tesco in showing how to use this (OK, and they weren’t the only ones involved.) The point is, there are many retailers for whom, to this day, the scanner is largely about ringing up sales and tracking the gross numbers, whether for inventory or otherwise.
I hope that it won’t take 20-30 years after the technology is adopted for management of inventory, before the industry makes serious use of what the technology can teach about the science of retailing. We have been using active RFID for “item level” tracking (but not inventory control) for 8 years now, and hope our new book, soon to be published by Wharton School Publishers, will wake a few people up as to what they don’t know, but should.
Unless the tests are done, there is no way to tell if the benefits exist. If management sees potential for the information to be useful, a test is certainly worthwhile. Without pilot tests you can’t know what might be possible.
Clearly it will be easier for retailers with larger items to start the RFID age rolling (think Costco vs. Claire’s), but in the near future, obviously, RFID will be commonplace. The benefits so incredibly outweigh the challenges that it’s a bit of a slap in the retail face that the conversion hasn’t happened sooner. Short sightedness being the usual demon.
It seems that being a fast second is the nature of retail today, which makes innovation the way to differentiate and win.
One thing that reduces both companies’ cost: they’re the producers as well as the retailers. However, given the low price points of American Apparel and the moderate price points of Jones, it’s not easy to see why RFID would yield a greater return than bar code scanning. The real test: will RFID be implemented 100% chainwide at either company? When that happens (not when it’s heralded in a press release about the future), it might be a decent sign that the payback is worthwhile.
Apparel retailers have tracked style and size, but not color. This always results in an inventory imbalance. RFID at the pallet and case level helps the supply chain, but little for the store. The fact is the majority of inventory is and should be at retail, so having accurate visibility is the future. The problem continues to be return on investment. ROI can only be achieved on higher value and control merchandise. The cost is still too high for every item.
The other problem is that RFID must be an all or nothing application. To only include some items and exclude others results in increased costs without the payback.
There are still some real world problems that have yet to be solved. At this time, RFID does represent a potential future, unless something else is developed.
RFID will continue to become a commonplace technology (think: UPC code of the future) as big users make it more cost-effective. Walmart continues to push in this direction, which makes it more realistic for other users. Certainly a SKU-intensive business like shoes could benefit from the sort of advancement in inventory management that RFID represents.
Hope springs eternal. At this point it isn’t a question of cost, it’s a question of return.
I get the impression that the apparel industry is not using barcode beyond the application of the UPC symbol for price look-up.
For instance, two pairs of shoes of different size and color, but same style and price will have the same bar code.
Can anyone confirm this, or provide further insight?
More Discussions
As Boomers ‘Age Out of Peak Purchasing,’ How Can National Brands Retain Interest With Gen Z?
According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…Is Supply Chain Volatility Here To Stay?
Can we expect an ongoing volatility to remain in terms of retail supply chain?Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?
RFID continues to be a terrific opportunity for certain items, suppliers, and retailers but is not yet ready for massive rollout on every SKU. This test will verify that you can track and manage inventory more effectively on high retail, average/low turn clothing.
The technology makes the most sense for high retail/high turn items like razor blades, laundry detergents, cosmetics, etc, where the cost of the tag and set up is easily absorbed into the item P&L and is offset by reduced inventories and higher turns.
Now, how do you translate that item P&L into very high turn items like a 50 cent can of Viennas or a can of Pringles? RFID is still cost prohibitive for many SKUs, but clearly makes great sense for the right items which center on that item’s P&L.
RFID has potential to enable better merchandising visibility, but only where it is wrapped into store-level compliance disciplines. These may be enabled by broader technology that incorporates the RFID signal into the total picture of shelf conditions.
In other words, I continue to maintain that RFID is a solution element, not a solution. When it is deployed as a signaling mechanism within system of superior store level practices, it has potential to give retailers an edge by triggering faster merchandising responses. If not backed up by an In-Store Implementation methodology, RFID is merely a tool that automates measurement of last month’s mistakes.
The MediaCart system is built on passive RFID using shelf labels. The discussion here is rightly focusing on inventory management, but there is a good deal more that can be done with the data. Think how long it took from when scanners were introduced until dunnhumby assisted Tesco in showing how to use this (OK, and they weren’t the only ones involved.) The point is, there are many retailers for whom, to this day, the scanner is largely about ringing up sales and tracking the gross numbers, whether for inventory or otherwise.
I hope that it won’t take 20-30 years after the technology is adopted for management of inventory, before the industry makes serious use of what the technology can teach about the science of retailing. We have been using active RFID for “item level” tracking (but not inventory control) for 8 years now, and hope our new book, soon to be published by Wharton School Publishers, will wake a few people up as to what they don’t know, but should.
Unless the tests are done, there is no way to tell if the benefits exist. If management sees potential for the information to be useful, a test is certainly worthwhile. Without pilot tests you can’t know what might be possible.
Clearly it will be easier for retailers with larger items to start the RFID age rolling (think Costco vs. Claire’s), but in the near future, obviously, RFID will be commonplace. The benefits so incredibly outweigh the challenges that it’s a bit of a slap in the retail face that the conversion hasn’t happened sooner. Short sightedness being the usual demon.
It seems that being a fast second is the nature of retail today, which makes innovation the way to differentiate and win.
One thing that reduces both companies’ cost: they’re the producers as well as the retailers. However, given the low price points of American Apparel and the moderate price points of Jones, it’s not easy to see why RFID would yield a greater return than bar code scanning. The real test: will RFID be implemented 100% chainwide at either company? When that happens (not when it’s heralded in a press release about the future), it might be a decent sign that the payback is worthwhile.
Apparel retailers have tracked style and size, but not color. This always results in an inventory imbalance. RFID at the pallet and case level helps the supply chain, but little for the store. The fact is the majority of inventory is and should be at retail, so having accurate visibility is the future. The problem continues to be return on investment. ROI can only be achieved on higher value and control merchandise. The cost is still too high for every item.
The other problem is that RFID must be an all or nothing application. To only include some items and exclude others results in increased costs without the payback.
There are still some real world problems that have yet to be solved. At this time, RFID does represent a potential future, unless something else is developed.
RFID will continue to become a commonplace technology (think: UPC code of the future) as big users make it more cost-effective. Walmart continues to push in this direction, which makes it more realistic for other users. Certainly a SKU-intensive business like shoes could benefit from the sort of advancement in inventory management that RFID represents.
Hope springs eternal. At this point it isn’t a question of cost, it’s a question of return.
I get the impression that the apparel industry is not using barcode beyond the application of the UPC symbol for price look-up.
For instance, two pairs of shoes of different size and color, but same style and price will have the same bar code.
Can anyone confirm this, or provide further insight?