For Clothing Retailers, Item-level RFID on Upswing

"We see a mixed bag of activity," Liard states, though much of item-level RFID adoption is in specialty retailers that can employ closed-loop solutions, such as those that manufacture, supply and sell their own products. That model was first created by companies such as American Apparel, which is tagging its products and tracking them from the point of manufacture to the point of sale.

The greatest driver is return on investment, Liard says. As tag cost has dropped, investment in RFID technology is beginning to be low enough to ensure that an end user recoups its costs within a few years. The systems, when they are deployed, are proving to reduce the cost of labor previously spent in such activities as inventory counting, he adds, while also decreasing the level of out-of-stocks, shrinkage and counterfeit products (which can impact the reputation of retailers unknowingly selling fraudulent products). Tags are also getting smaller—and, therefore, more attractive and less cumbersome—when attached to garments. And some companies are offering total RFID solutions, including integration, hardware, software and installation. Such firms include Checkpoint Systems, which serves the CPG, retail and pharmaceutical markets.

According to Liard, footwear is not taking off at the same rate. That industry has been slower to adopt the technology, he says, in part because tagging is more complicated. To tag apparel, a single RFID-enabled hangtag is attached to each garment, but to tag a pair of shoes, RFID inlays must be attached to both shoes (or embedded in their soles), as well as to their shoebox. The movement of shoes and their boxes around a store, he adds, also makes the business challenge different than that of the garment industry. Thus far, the challenge for footwear has been to use RFID to help match a shoe with its mate and their box, thereby ensuring customers purchase the proper pair. Shoe retailers have been piloting this application, but few are fully deploying the technology at this point.

Areas of innovation that may still be necessary for wider RFID adoption, Liard states, include the handheld interrogator market. While fixed readers are being deployed at dock doors and in back rooms of stores, the handheld is still an important part of most retail deployments. Nonetheless, he says, handheld RFID interrogators still need to be further developed. Most are too large and bulky for use on a store's sales floor, he notes—especially if the handhelds are to be used in the presence of customers, such as reading a tag for them to gain information regarding a specific garment. The price of handheld interrogators is also still too high for many retailers, though Liard cites new products provided by such companies as Hong Kong-based Convergence Systems Limited (CSL), with a reader that costs $1,750, as opposed to many handheld devices that can cost several thousand dollars apiece.

Other RFID-enabled technologies that are spurring the expected growth, Liard says, are mirrors (see To Glimpse RFID's Future Down Under, Gaze into the EPCmagic Mirror), shelf labels (see Two Food Chains Trial RFID-based Electronic Shelf Labels), shelving and point-of-sale systems (see Clothing Designer Brings RFID to Its Shoppers).