American Apparel Adds RFID to Two More Stores, Switches RFID Software RFID_Software

By Claire Swedberg

The clothing company has installed Xterprise's RFID software in 10 stores, and is now eyeing incremental installations in some of its other 280 outlets.


Continuing on its venture into item-level tagging of garments at its hundreds of stores, clothing retailer American Apparel is moving forward with its RFID deployment by installing the technology at two additional locations, thus providing the retailer with a total of 10 RFID-enabled shops.

All 10 stores will use Xterprise‘s Clarity Advanced Retail Solution (ARS) Electronic Product Code (EPC) and inventory-management RFID software application. Previously, eight of the locations had utilized an RFID software application other than Xterprise’s. In 2008, American Apparel had indicated it would test the Clarity Advanced Retail System (see American Apparel Expands RFID to Additional Stores). ARS, says Zander Livingston, the retailer’s director of RFID, will provide the company with greater flexibility than the previous RFID system it used, because it will allow the retailer to easily add new stores to the system, and because it offers an interface between the RFID software and the RetailPro software application that American Apparel utilizes for enterprise resource planning, inventory management and point-of-sale (POS) processes.

Thus far, American Apparel’s IT department has written a command into the Xterprise software allowing the RetailPro application to receive an item’s RFID number at the point of sale as if it were a bar-coded stock-keeping unit (SKU) number. This enables the staff to simply read the RFID tag in order to complete the checkout process (rather than reading an item’s RFID tag and then scanning its bar-coded SKU number to link the sale with RetailPro). RetailPro and the ARS application still operate separately, however, and are not integrated with each other. American Apparel intends to link the two inventory-management systems, Livingston says, by making the necessary changes to the ARS software by writing applications that will allow that integration, which had not been possible with the previous software solution.

The Xterprise solution employs Microsoft‘s Windows Server 2009 R2 platform, SQL Server 2008 and BizTalk Server 2009, which includes BizTalk RFID and can manage hundreds of interrogators from a central server, says Dean Frew, Xterprise’s founder and CEO. In that way, he says, the stores can run a central server, transmitting their data to that central location, which allows new stores to be easily added to the existing server. “The installation timeline for a new store can be measured in hours,” Frew states.

The next phase for the company—which claims to be the largest clothing manufacturer in the United States—is to install an RFID-based electronic article surveillance (EAS) system in six Florida stores, Livingston says, which will send alerts if anyone attempts to take an item out of a store without paying for it.

At American Apparel’s factories, workers apply an Avery Dennison RFID-enabled hangtag to each garment. The system also includes an RFID reader at the company’s distribution center in Los Angeles. There, workers use a Motorola FX -7400 interrogator to read the EPC Gen 2 passive UHF RFID tag embedded in each garment’s hangtag before the clothing is shipped to the stores.

At the 10 RFID-enabled stores—nine of which are located in New York, the other in Santa Monica, Calif.—employees use RFID interrogators to record the receiving of those goods, take inventory of items in the back room and on the sales floor, and identify clothing being purchased.

When garments arrive at a store’s receiving station, staff members utilize a fixed Motorola FX-7400 RFID interrogator to capture the ID number encoded to each item’s tag. That information is then sent to the ARS software in the back-end system via a cabled connection. The Xterprise software stores the unique ID numbers, each linked to the appropriate garment’s SKU number. Workers then take the items to what is called the fill station, where they use an RFID interrogator to read the tags and determine which items to bring to the sales floor, and which should go into the back room for storage. As the goods are carried up to the store front, workers stop at a validation point, where another fixed interrogator reads the tags once more and displays confirmation that the correct items are being taken to the store front—or an alert is sent indicating that an item is missing, or that a garment is present that should not be there. Periodically, employees use handheld readers to take inventory on the sales floor.

Because the company acted rapidly in installing the system at its stores, Livingston says, it now needs to fine-tune the technology to make it more manageable for those using that system, such as linking the ARS inventory-management software with the RetailPro application in order to reduce the need for workers to both read the tags and manually enter data related to inventory in the RetailPro system.

“Because RFID was running independently,” Livingston says, “we were asking employees to do both the RFID and [RetailPro] ERP functions,” which meant that when receiving a new item at the store, or when processing a customer purchase, workers often had to employ a bar-code scanner in order to input information into the RetailPro system, as well as using the RFID reader. In some cases, employees would have different inventory counts on the separate systems, and would then need to reconcile those figures; typically, he says, the RFID system had the accurate count.

American Apparel has successfully brought the ARS RFID software together with the RetailPro POS system, however, by writing software code enabling the ERP system to treat an RFID read as if it were a bar-code scan. Employees now simply place an item on the desktop reader and ring the item up, Frew says, without going through the separate function of scanning a bar code to enter the sale into the RetailPro software. “That speeds up the checkout process,” he explains. “There is no change to the POS system—we’re just putting an interface hook into it as if we are a bar-code scanner.”

Since RFID was installed at the stores, Livingston says, the company has seen sales lift, because more items are on display at each location, and the sales staff has more time available to work with customers. Each shop carries approximately 38,000 items. Identifying the amount by which sales has increased due to the RFID system, however, has proved more difficult than expected, Livingston says, due to the many mitigating circumstances that can affect sales. Because of the rapid opening of new American Apparel stores, a few have “cannibalized” sales from some of the retailer’s other nearby already-existing stores, but other circumstances—anything from a sick employee to a broken sign or the slumping economy—could affect sales, he says, though he adds, “If we are providing 10 percent more product on the shelf, then you have a sales lift. We just don’t have a definitive number.” Shrinkage (loss of products due to lost or mis-shipped items or theft) has dropped at the RFID-enabled stores, he adds, with employees having access to better data regarding the location of inventory. Staff turnover is expected to drop as well, Livingston notes, since employees are happier working in a store in which inventory is easy to track and inventory counts are reliable and not difficult to accomplish.

According to Livingston, the Xterprise software allows American Apparel to offer a user interface that makes it easier to add new stores to the system, as well as make changes on reporting within a particular shop. “We are at a point now where we have a stable, scalable solution performing up to our requirements,” he says, and the retailer is now better prepared to begin expanding its use of the technology.

The next step for American Apparel is to deploy RFID gates at the doorways of six Florida stores, in order to read EPC Gen 2 RFID tags inserted in security tags on any items removed from one of those shops. The staff will attach an RFID-based EAS hard tag that locks onto an item just as a non-RFID hard tag does. When the tag passes through a gate’s RFID reader, its ID number will be captured and the gates will sound an alarm, indicating an item is being stolen. If an item goes through the point of sale, however, its hard tag will be removed. Hardware vendors for the RFID interrogators and tags have not yet been identified.

American Apparel operates 250 retail stores in the United States, Europe and Asia, Livingston says, and eventually intends to install an RFID system in all of them. In the meantime, he adds, the company’s focus is on improving the software to integrate more closely with the store’s inventory-management system, thereby reducing the amount of tasks workers need to accomplish during such processes as receiving items, transferring goods and accepting returns.

Once RFID is deployed in a store, Livingston says, the increase in that location’s sales ranges anywhere from 2 to 8 percent, though he calls that a conservative figure. Inventory accuracy is at 99 percent, Livingston says.