RFID technology is nearing a tipping point with apparel retailers. New research unveiled this week by standards group GS1 US reveals that 57 percent of retailers have deployed RFID, while 19 percent plan to roll out the technology within 12 months.
Another 10.5 percent of retailers plan to deploy RFID in the next 13-24 months. Retailers responding to the survey stated that 47 percent of items received by apparel and general merchandise retailers now carry RFID tags.
“These findings confirm that the retail industry is nearing an RFID adoption and usage tipping point,” says Dr. Bill Hardgrave, dean of the Harbert College of Business and founder of the RFID Lab at Auburn University. “RFID is no longer just something proven in concept — it is providing tangible results for manufacturers and retailers, and provides the inventory accuracy that omni-channel retailing demands.”
The survey measured the usage of EPC-enabled item level RFID by both manufacturers and retailers (including manufacturers who are also retailers) located in the U.S.
While tagging numbers are not as strong in the manufacturing sector, trends show that apparel manufacturers are accelerating the use of the technology. Nearly half of manufacturers (48 percent) say that they are currently implementing RFID, while 21 percent will deploy RFID within the next 12 months. Additionally, 18.4 percent plan to begin deploying RFID in the 2016-2017 time frame. While 18 percent are not tagging any items yet, 9 percent report that they are tagging all of the products they produce.
At the NRF Big Show in January, Ken Duane, the CEO of Heritage Brands and North America Wholesale, PVH Corp., confirmed that his company will start to tag all of the products it manufacturers by the end of this year. Currently, the manufacturer of the Calvin Klein, Van Heusen and Tommy Hilfinger brands has only tagged underwear, core intimates and less than half of its dress shirt categories.
“It won’t be cheap when you consider we sell several million shirts,” Duane said during NRF. “Initially, I wondered how I would absorb the cost. But my margins improve, I’m selling stuff at full price, I have on-time delivery, I eliminate (out-of-stocks), I can better project my sales, and better service the customer.”
The benefits of RFID are well documented for retailers like Macy’s, Kohl’s and American Apparel. The technology provides greater than 95 percent inventory accuracy, with some retailers reporting more than 98 percent accuracy. In addition, RFID drives increased sales and margins, as well as improved consumer loyalty. Hardgrave says that he has yet to see a retail deployment where sales did not go up when RFID is deployed properly.”
At the beginning of this year, Hardgrave said that while two-thirds of the top 100 apparel retailers in the U.S. had engaged with RFID, only one third of apparel retailers in the mid-to-bottom half of that list have deployed the technology. He expects that group to increase their use of RFID during 2015.
For manufacturers, RFID offers benefits including reinforcing authenticity, decreasing inspection costs, reducing shrinkage and enhancing logistics accuracy.
“After seeing the proven benefits of RFID in pilot programs, both manufacturers and retailers are realizing its many long-term business advantages,” says Melanie Nuce, vice president of apparel and general merchandise, GS1 US. “As industry collaboration and discussion grows, it will be difficult for companies to ignore RFID’s role as a critical enabler of inventory visibility and the seamless customer experience.”