This week Checkpoint Systems held its annual Apparel Day in Germany. The event, which focused on RFID in retail, highlighted some stunning gains that retailers are reaping from the technology. Rafael Alegre, General Manager Europe, Checkpoint Systems, was kind enough to write the following summary of the event for RFID 24-7.
While results vary for retailer’s specific operations, the event revealed that many retailers have reduced out-of-stocks by up to 30 percent, increased sales by 5 percent, and reduced working capital anywhere from 10 to 20 percent after introducing RFID into their operations.
These numbers reinforce role RFID plays when it comes to customer experience. We’ve all seen what happens when a consumer walks into a store and finds a pair of jeans that they like, but the correct size is not on display. They leave without making a purchase. What is the tangible result of that missed sale on your business?
The obvious answer is, the value of the pair of pants. However, the effect of that missed sale can go well beyond the value of one item. First, along with the jeans, the shopper may have bought three shirts, five pair of socks, a belt, and shoes. In addition, the missed sale also influences the customer’s perception of the store and, in the worse case scenario, might mean that they never return, making the potential loss infinite. Ultimately, it is impossible to know just how much you are losing by having an out-of-stock situation.
Every retailer knows how important the customer in-store experience is. After all, happy customers generally mean more sales. However, despite store owners investing huge sums in market research to attract people through their doors, one thing that is often overlooked is the effect out-of-stock scenarios can have on sales, brand reputation, and the bottom line.
The theme of Apparel Day to shine a light on the problem of merchandise availability for apparel brands and retailers. The event focused on the use of RFID to reduce out-of-stocks and improve transparency throughout the supply chain, as well as how the technology can help increase sales by enhancing the customer experience.
It was great to see so many high-profile apparel retailers in attendance, which highlights just how seriously the apparel industry is taking the issue of RFID in terms of business performance. RFID has clearly become a reality, rather than a promise for the future.
A number of companies in the apparel industry are already utilizing the benefits that RFID offers along the entire value chain — whether on the sales floor, at the distribution center, or the point of manufacture. The tangible benefits are clear, with stores making significant strides forward in terms of shelf availability.
It is fair to say that apparel source tagging has come a long way over the years, which in addition to the compelling ROI evidence, has contributed to the RFID revolution in retail. One of the most important advancements has been that the technology can now be integrated into an ever increasing array of carriers, such as price tickets and woven trim items on clothes.
As we know, these intelligent labelling solutions, together with the right hardware and software, allow retailers to error-proof their supply chains, optimise inventory levels, alert store personnel when merchandise must be re-stocked and automatically reorder when quantities are low. And the solution can also be interfaced with loss prevention systems, which adds even more value to the retailer’s operations.
During the event, Lothar Struckmeier, managing director at RFID solutions provider NordicID, revealed that he expects that the top 10 European fashion retailers will have begun introducing RFID solutions into their operations by 2015, with the laggards to follow. This prediction is very much in line with what we are seeing today. Once pilot programs are complete, our customers are finding the ROI exceeds their expectations. For this reason, retailers are understandably being cautious about unveiling the extent of their current successes due to the competitive advantage they are creating.
But ultimately, the event highlighted how RFID can add significant value to the consumer’s shopping experience, which is a key sales driver. Having merchandise readily available is essential in today’s highly competitive retail industry and store owners must begin looking seriously at the benefits of solutions that reduce out-of-stocks and improve supply chain operations.
It’s clear that RFID is revolutionising the apparel industry. I have no doubt that we will see a number of high-profile apparel retailers announce shortly that they are starting to roll out solutions in this area over the next 6-12 months.