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Apparel Retailers Finally Get RFID

Omnichannel has created a sense of urgency and is spurring adoption.
By Bill Hardgrave
Apr 27, 2014

In my first column for RFID Journal, in the Sept./Oct. 2012 issue, I addressed the state of radio frequency identi­fication adoption among U.S. apparel retailers (see Tracking Your Competitors). At that time, studies had shown that RFID could improve inventory accuracy from an industry average of 60 percent or less to more than 95 percent. Yet, the apparel retail industry was still in the early stages of adoption.

As is typically the case with any new technology, a few brave specialty and department store retailers pushed the envelope and served as early adopters. The benefits these retailers—including American Apparel, Bloomingdale's, Macy's and Walmart—achieved have been well documented. RFID solution providers responded with better, cheaper and faster hardware and with new software to handle RFID data. Still, most retailers continued to sit on the sidelines waiting for "the right time."

To be fair, some extenuating circumstances, such as the Great Recession and the threat of lawsuits from so-called patent trolls, no doubt contributed to slower-than-anticipated adoption the past several years. But I believe one of the main reasons for the relatively slow pace of adoption has been a lack of urgency.

Today, it is hard to find a retailer that is not aware of RFID and its ability to improve inventory accuracy. Nevertheless, while retailers acknowledge that widespread adoption will likely occur, they would prefer to make the move to RFID along with everyone else. Most retailers have been content to wait and follow the herd.

Recently, though, the dynamics in retail have begun to change due to the rapid ascent of the "omnichannel" concept. In short, omnichannel retailing means customers should have a consistent and seamless experience whether they are shopping in a store, on a mobile device, on a home computer or by phone. Nowadays, consumers are in control, demanding product when and where they want it (see Retail 3.0). And, as I indicated in my Omnichannel Retailing column, the ability to provide this service begins with operations—in particular, those that deliver real-time, accurate inventory data efficiently and cost-effectively.

Now, retailers get RFID. The vast majority—especially the large retailers—realize they must operate on an omnichannel level to stay competitive. And with omnichannel rising so fast, retailers finally feel an urgency to adopt RFID to achieve the inventory accuracy they need.

The number of retailers expressing interest in getting started with RFID or extending their current RFID initiative has increased significantly since the beginning of 2014. Two out of three of the top U.S. apparel retailers are doing something with RFID, ranging from investigation to full deployment. Omnichannel has provided the motivation, and the herd is on the move.

Bill Hardgrave is the dean of Auburn University's Harbert College of Business and the founder of University of Arkansas' RFID Research Center. He will address other RFID adoption and business case issues in this column. Send your questions to hardgrave@auburn.edu.

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