New research from Frost & Sullivan predicts that the RFID apparel market will grow to a $1.47 billion in 2017, behind strong demand for item-level tagging by retailers. In its report, Frost & Sullivan says that the apparel sector generated $420 million in revenues in 2010.
“The need for business process management is expected to drive demand for RFID within the apparel industry,” says Frost & Sullivan research analyst Ram Ravi.
Ravi says that continued pilots — as well as post-pilot production ramp-ups – will fuel demand. Deploying RFID provides complete automation of various processes along the supply chain, resulting in better inventory visibility, greater supply chain management, improved sales and better customer service, while negating the impact of counterfeit products. In addition, mandates from large retailers to their suppliers to implement item-level tagging are also driving growth.
Retailers like Macys, Walmart, JC Penny and others are rapidly deploying RFID to gain better inventory accuracy. “We were very focused on inventory accuracy,” Bill Connell, senior vice president of logistics and operations at Macy’s, said in April. “Our journey began with achieving the benefits from accurate data.”
Ravi says that customers in the apparel industry are generally conservative toward the adoption of new technologies. This can be attributed to several factors including the price, lack of knowledge, lack of business case and understanding about the technology. Although RFID in apparel has developed over some years, several customers are still unaware of the technology and its benefits.
“A key aspect behind retailers’ apprehension is the cost associated with the implementation of the technology, as they operate on low-profit margins,” says Ravi. “Suppliers need to provide a wide array of products and solutions catering to the individual needs of their customer and also provide training and services such as technical consulting to educate their customers about the benefits of the technology.”
While inventory accuracy remains a key driver for adoption, retailers are also experiencing big benefits from loss prevention. American Apparel has reduced shrink by an average of 55 percent at its locations that are equipped with RFID, with some stores curtailing theft by as much as 75 percent.
Stacey Shulman, vice president of technology at American Apparel, tells RFID 24-7 that the technology has proven to be an enabler for the retailer’s loss prevention team, providing the information needed to zero in on loss situations and identify exactly where shrinkage occurred. By studying fraud detection patterns exposed by RFID, American Apparel has identified dozens of sources of internal theft since implementing RFID. In each case, interrogation led to an admission of guilt by the employee.