• Department Stores are shifting Their Stance:

According to Kay, in December 2007 a major U.S. department store chain informed its suppliers that it expected their senior executives to give serious thought to working on item-level RFID. "This is the signal that dozens of apparel and footwear companies have been waiting for," he notes. "Until now, merchants and suppliers have been treating RFID like an asteroid, worrying when it will hit and what the impact will be. Now a major retail account has issued its first clear, written directive, asking these suppliers to get their act in gear on RFID. It's not a mandate - in fact, this retailer has gone to great lengths to emphasize that it hopes it won't have to issue a formal mandate - but it's a significant milestone and it will generate a series of deployments."

Department stores may be reacting to the competitive edge that specialty stores with closed-loop supply chains have in the RFID area. On a practical level, retailers who control their supply chain processes will have an easier time with the mechanics of item-level RFID solutions: matching unique item information with unique RFID chip identifiers in a database; embedding RFID chips in labels; matching the correct label to the correct item; and shipping them to retail stores. A closed-loop supply chain can facilitate a closed information loop, allowing retailers to chart each product-s journey through the store- from the back room, on to the sales floor, and through the pas to the consumer.

Tagging logistics are another practical consideration during an RFID initiative. Industry experts and RFID vendors note that hang tags can make for an easy adoption process. In addition, to get the most out of the information capabilities of an RFID system, tagging multiple style, size, and color product sets are ideal item selectivity characteristics.

Looking Ahead

One positive sign for RFID's long-term prospects is that the metrics being used to measure a deployment's success are moving away from technical issues, such as read rates, toward metrics that have an actual impact on a retailer's business. In addition to sales increases, in-stock positions and conversion rates, customer experience metrics are becoming part of the analysis. Key performance indicators such as the average duration of a customer's store visit and the amount of time customers and associates spend searching for merchandise "are only now starting to get the attention they deserve," says Kay.

At this point in RFID's development, carefully focused deployments yielding such distinct, easily measurable benefits make strong business sense. But RFID's flexibility and its "fit" for apparel and footwear retailing indicate that companies seeking the biggest ROI should be prepared to expand their limited deployments to more items, more stores, and more parts of their enterprise.