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American Apparel Going to Item-Level RFID in Stores
Fashion retailer American Apparel announced plans to implement item-level RFID management systems at its 120 North American retail stores. The chain is currently installing systems at 16 New York City area locations following a trial that significantly reduced the time needed to take inventory.
Apr 16, 2008—This article was originally published by RFID Update.
April 16, 2008—American Apparel doesn't do things like other clothing companies. The Los Angeles firm manufactures its own merchandise -- in the US -- and sells exclusively through its own stores. It bought a transportation company to get goods to stores, and a fuel company to supply the trucks. The company is committed to having every clothing item available in every size in every color, every day. To do that, American Apparel is going to manage its merchandise with item-level RFID tracking.
The company has been piloting item-level garment tracking at a store near Columbia University in New York and plans to have RFID systems installed at all 17 of its in New York City stores by June 1. It expects to expand RFID to all 120 of its North American retail stores eventually.
"The culture at American Apparel is very hip and forward thinking. That whole attitude was a key to their item-level tagging program," said Stephanie Brush of Motorola, which is one of three RFID solution providers, along with Vue Technology and Avery Dennison, who announced their involvement in the project. The Gen2 system includes readers from Motorola, tags and printer/encoders from Avery Dennison, and RFID item management software from Vue.
To ensure product availability, American Apparel takes complete in-store inventories twice per week, then restocks and reorders as necessary. The inventory process typically occupies four employees for eight hours. At the RFID-enabled Columbia University-area store, it takes two employees just two hours to take inventory. American Apparel reported inventory availability at the store exceeds 99 percent. The company uses RFID to record goods received, to deduct goods sold by recording them at the point of sale (POS), and to count inventory in the back room and retail floor. RFID tags are removed at the POS when products are sold.
"What American Apparel has really found is the reduction in man hours needed to maintain their unique inventory strategy," Brush said.
"They are not afraid to change their processes if they see a better way of doing things," added Motorola's Tom Racette.
The pilot tracked about 40,000 items. The tags were applied during manufacturing, then programmed when they were received at the store and recorded in the inventory system. Tag volumes will grow substantially as the next 16 stores begin using RFID, so American Apparel may start encoding at the point of manufacturing, according to Motorola. A typical store system may consist of fixed-position readers at the receiving door and the POS station, perhaps another in the back room, and two or three handhelds.
Earlier this year, Avery Dennison, Motorola, and Vue Technology announced their collaboration on an item-level tracking pilot system for footwear maker New Balance. Aside from those two projects, other recently announced item-level programs by retail and fashion companies have come from Europe. For examples, see:
"I think some of the lack of adoption was simply due to lack of adoption -- that is, companies didn't see their competitors or others in the industry doing much, so they didn't get too involved," Brush said. "We've needed a thought leader to emerge. American Apparel, with its innovative culture, could help that."
Mass merchandiser Sam's Club could also help bring item-level tagging into the North American retail mainstream. Earlier this year the company said some of its suppliers needed to tag goods at the item level by 2010, but it did not divulge many program details (see Sam's Club Suppliers May Face RFID Fines from Wal-Mart and Sam's Club Wants Item-Level RFID Tagging by 2010).
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