Interview with Francisco Melo

Francisco Melo
Vice President & General Manager, Global RFID
Avery Dennison

Apparel retailers see a less than a year payback, after using RFID solutions

Avery Dennison is one of the largest UHF partners in Radio Frequency Identification (RFID)-enabled solutions with applications and global manufacturing capabilities that have produced over seven billion RFID tags and labels. Francisco Melo, vice president and general manager, Global RFID, Avery Dennison discusses the potential of RFID-driven omni-channel retail opportunities.

Where do you see the application of RFID increasing: in-store, backroom, or for product-tracking?

Within apparel retail, the growth of RFID is happening across the entire store. Because products are best tagged at source, items coming into the store have RFID tags, and retailers then gain visibility of what they have both on the sales floor and in the back room.

Can RFID improve the omni-channel retail experience?

Absolutely. RFID enables retailers to more confidently expose their entire in-store inventory, versus only doing so when items are above a certain safety stock threshold. This enables consumers to easily locate the items they need. And if the store they are shopping at does not have the item, the retailer can leverage RFID to quickly find it at another location.

While online shopping has slowed store traffic, store traffic that remains is valuable and purposeful - shoppers who are there are there to buy. This means that with an omni-channel environment retailers ensure they have the right inventory in store to optimise buying opportunities.

Outside of the store, as the world becomes increasingly connected, it's critical for brands and retailers to gain differentiation in the market through unique personalised consumer experiences. And having inventory accuracy is vital to the success of these platforms.

Today, retailers are engaging consumers on their smartphones; technology is revolutionising the consumer experience. Through Avery Dennison's RFID solutions and products, we're enabling the connection between the physical and digital worlds, connecting products with the internet of things (IoT) to improve the consumer omni-channel experience.

For example, we recently collaborated with Sarah Angold, eponymous designer, to embed custom-made jewelry with RFID technology, providing links to Oak Labs' interactive mirrors to elevate the consumer experience. At the National Retail Federation's (NRF) Retail's BIG Show, held last month in New York City, attendees could try on the accessories to gain immediate access to item-level product information, insights on where and how the pieces were made, and were even given styling recommendations for a unique retail experience.

What is the percentage share of RFID solutions being used in apparel retail globally?

Today, apparel retail represents 70 per cent of RFID tag volume, according to IDTEchX data.

What is the size of the apparel retailers that have adopted RFID solutions at Avery Dennison?

While we can't comment on all of our customers, globally, it is currently national and multinational retailers that are adopting RFID, including Marks & Spencer, Macy's, Decathlon, and lululemon.

Do you think NFC will take-over RFID soon in the retail domain?

The use case for NFC (also a form of RFID) is fundamentally different than ultra high frequency (UHF) RFID. UHF RFID is a 'one-to-many' technology that is ideal for inventory accuracy applications as it allows many items to be quickly detected without line of sight.

NFC, on the other hand, is a one-to-one technology that requires close proximity. In the retail space, it's primarily used for payments (phone to terminal - or register) and consumers use it to directly scan a product for authentication purposes, where the smartphone will scan a hangtag.

An example of this is shown in our Janela solution, powered by EVRYTHNG Smart Products Platform. The technology enables apparel and footwear products to have a unique, item level identity connected to a digital profile, often linked with experiences and rewards. Together, with EVRYTHNG, we recently announced a cutting-edge collaboration with New York fashion brand Rochambeau to produce an exclusive fall/winter run of 'Bright BMBR' connected jackets. Triggered by a smartphone, the 'Bright BMBR' jacket enables wearers to personalise content, receive retail awards and information, and gain access to one-of-a-kind experiences.

The left sleeve of the smart jacket features a hidden zipper pocket containing a limited-edition label with a custom NFC chip and personalised QR code, allowing consumers to connect with these smart tags and access rewards and curated experiences.

What is the ROI after using RFID solutions specifically for apparel brands?

Typically, apparel retailers see a less than 1-year payback. Our team is equipped to develop ROI models specific to customers' business realities. This results in increases in sales, and marked increases of inventory accuracy of 99 per cent.

Besides tracking a garment, what are the different ways customers can be engaged using RFID?

RFID is becoming more pervasive in the market for consumers. While still developing on a large-scale, there are models for interactive fitting rooms, including the previously mentioned Oak Labs mirror, that can provide more seamless service and product recommendations, elevating the consumer experience. Automated checkout is also becoming more of a reality. In a scenario where a retailer is tagging all their inventory, they can enable a seamless point of sale experience.

Overall, however, UHF RFID enables retailers to drive operational improvements. While this isn't directly consumer-facing, it has a significant impact on the shopping experience and consumer satisfaction. For example, when Macy's deployed RFID in their women's shoe department, the products became twice as easy to find, year-over-year, compared to their other metrics on the Net Promoter Score.

What is the future of RFID in apparel retail? What will be the new areas of application?

Today, the baseline application is in-store inventory accuracy and replenishment, which enables better omni-channel fulfillment - ship-from-store, and buy online, pick-up in store - in addition to allowing retailers to provide product location based on product availability.

With these fundamental applications in place, retailers can enable additional applications such as interactive fitting rooms, loss prevention analysis, analysis of sales by item location, and merchandising/planogram compliance.

Do you think providing a digitally connected in-store experience is the only way retailers can pull customers?

Technology is a means to enhance and improve a retailer's core value proposition to shoppers, whether that is about product, service, convenience or pricing. As the physical and digital world continues to merge, digital technologies will be most successful with a combination of those fundamentals in place to pull customers into stores. Some of the most interesting examples of are when technology works behind the scenes to make the shopping experience more fulfilling.

Other examples include technology enabled stores. In these instances, technology is used to create an ultra-convenient shopping experience (as they have online) rather than enable consumers to interact with a tablet. Retailers are also using "analog" ways to drive traffic - you see a lot of examples of this in the grocery space.

What are some of the latest RFID innovations at Avery Dennison?

One of the areas we are focusing on is enabling additional retail categories such as cosmetics, so retailers can use RFID across their sales floor. We are also developing products that can be used for the life of garment. We are also focusing on continuing our leadership and innovation on offering some of the most environmentally sustainable RFID products.

We continue to expand on our Janela technology solution, powered by EVRYTHNG, in a partnership with designer Rebecca Minkoff. Following our collaboration with EVRYTHNG, Rebecca Minkoff recently launched a line of purses - smartbags - that feature a special hangtag powered by Janela, offering consumers access to the designer's Los Angeles fashion show, among other rewards.

What news can be expected from RFID in 2025?

Over the next decade, there will be significant penetration of national and multinational apparel retailers, with RFID solutions integrated across the broader retail IT landscape, such as enterprise resource planning and analytics applications. We also expect continued expansion into other retailer categories and consumer goods, like food, pharma and cosmetics.

Published on: 09/02/2017

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.