Use of RFID for apparel tagging raised sale for companies
Numerous apparel companies have reported increased sales of up to 20% using RFID to monitor shelf stock levels. It is now emerging as the first major application of RFID in retail, with a strong business case.
In 2008, IDTechEx research finds that 38% of the money spent on RFID in retail is specifically for apparel tagging. Here Dr Peter Harrop, Chairman of research firm IDTechEx, summarises the findings from the new IDTechEx report RFID in Apparel 2008-2018.
In 2008, the total money spent on RFID tags and systems for apparel will be $68 Million, which is a huge 38% of the total amount spent by retailers on RFID globally.
This reflects the surge in activity of apparel tagging given the demonstrated business case by an increased number of retailers. By 2013, the amount spent on apparel RFID will rise to $988 Million.
The pioneers of RFID on apparel:
First came laundries tagging rented apparel etc. That is now commonplace but not a very high volume market. After that, came retail apparel, where a huge number of trials have taken place over the last ten years but very few rolled out to a full adoption.
In parallel, certain other parts of the retail apparel value chain saw some adoption such as the tagging of rolls of cloth and the tagging of cases and pallet loads under retailer mandates.
Marks and Spencer in the UK was first in the world to tag apparel in shops in a big way and in 2010 it is on track to have these disposable swing tags on all its 350 million items of apparel passing through yearly, the payback - primarily from reducing stockouts - being an unmissable one year in the estimation of IDTechEx.
This is despite the tag not being interrogated at the checkout and not usually present on returned goods because it is large and the first thing to be removed by the customer after purchase. The company has bought more RFID tags than any other retailer or consumer goods company (CPG) in the world.
Recently, Lemmi Fashion of Germany and others took the decision to do the same, tagging apparel in Germany. Companies have remained quiet about the payback, given the competitive advantage, but some have stated the benefits.
For example, American Apparel reported that inventory availability during a trial exceeded 99 percent and sales increased by 15 to 25 percent when all items were available on the floor. The value of each piece of apparel versus the cost of the tag makes a strong payback calculation.
200 million tags in 2008:
In 2008, approximately 200 million tags will be bought for apparel, with 75% of that bought for Marks and Spencer, the others being for companies such as Sumitex International, Lemmi, Sungod Enterprises, NP Collection, Sanyo Shokai, Throttleman, VF Corporation and Tomorrow's Mother.
Most other forms of consumer goods beyond apparel are later in adoption of RFID at item level because they are more troublesome technically.