In mid-August, Jones Apparel group announced that one of its retailer divisions, Nine West, will soon start an item-level trial program using radio frequency identification (RFID) technologies.
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The goal of the pilot program, which will commence in “select” Nine West stores, “will be to study the benefits that item-level RFID provides in the areas of enhanced productivity, customer service and inventory accuracy,” stated Jones Apparel executives.
Nine West is treading where many retailers and consumer-product goods manufacturers—Wal-Mart, Procter & Gamble, Gillette and Kimberly-Clark, to name just a few—have been for years: Trying to extract critical logistical data that item-level RFID tracking can, in theory, deliver to supply chain and merchandising functions. (See Kimberly-Clark’s Secret to RFID Success for more on that consumer-good manufacturer’s RFID efforts.)
Wal-Mart has been on the bleeding edge of RFID adoption since 2004, achieving varying levels of success along the way. In early 2008, though, Wal-Mart reconfirmed its commitment to its five-year RFID push among its hundreds of suppliers.
A Jan. 7 letter to Sam’s Club suppliers (Wal-Mart owns Sam’s Club) stated that they could face fines for not attaching RFID tags to their shipments to a Texas distribution center. Suppliers were informed of the possible fines, which ranged from $2 to $3 for each non-RFID-tagged pallet.
The Trials and Tribulations of RFID in Retail
Success with RFID in today’s retail supply chain has been spotty, even more so at the item level. A recent Forrester Research report on the ROI of RFID for supply chain visibility noted that “amid the hype, the business value of deploying RFID technology across trading partners has been blurred by questions about costs, benefits and scope, and answers are elusive.”
Economics of the tag costs relative to the value of the item being tagged have dogged many a manufacturer, notes the report. (All of the aforementioned challenges are nothing new; the same issues have been front and center in 2004, 2005, 2006 and 2007.)
Research released in August 2008 by the RFID Research Center at the University of Arkansas showed further promise for the use of RFID tags on individual retail items, though there were several disconcerting challenges noted in the study. According to the results, not all tags and RFID tag readers are created equal, and there were a “wide range of read rates based on tag type and reader type.” In addition, tag placement on merchandise was critical for success—standards “regarding the location of tags on items to ensure proper readability” are key.
Most revealing, however, was that “read rates degrade, in most instances, by the number of items on the fixture, in the box, etc.,” noted the study. “We varied the number of items to provide a breadth of read rates and perhaps a realistic preview of actual use. Obviously, the number of items on a fixture, in a box, etc., will vary by the company, store or situation.”
In other words, the more items the reader had to scan in one instance, the less successful it was.
No matter the difficulties, executives at Jones Apparel decided that RFID vendors systems and technologies had matured enough to “kick the tires,” so to speak.
“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,” noted Sergio Prosperino, senior vice president or store operations at Nine West.
Partners in the Nine West pilot include: Vue Technology , which will provide the RFID software and system management solutions; Motorola’s Enterprise Mobility Business, which will provide fixed and handheld RFID readers and antennas; Avery Dennison, which will provide RFID tags and printers; and inCode Wireless, which will provide installation and integration services and, along with RFID Sherpas, will perform operational and business case analysis, according to the announcement.
“We are eager to begin this test to explore the benefits that RFID can provide in our retail footwear locations,” stated Norm Veit, executive vice president of MIS at Jones Apparel. “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.”