American Apparel Adopting RFID at Every Store

By Claire Swedberg

After several years of trialing item-level EPC Gen 2 passive tags and readers at select locations, the clothing company is now installing the technology at all of its retail operations worldwide.

Global clothing retailer and manufacturer American Apparel reports that it intends to equip all of its 280 stores with radio frequency identification technology, following a deployment of RFID readers and tags last year at 100 locations (see American Apparel Adding 50 More Stores in Aggressive RFID Rollout). The system—employing an ultrahigh-frequency (UHF) EPC Gen 2 passive RFID tag to track every item as it enters the store, is moved to the sales floor and then proceeds to the point of sale (POS)—has proven to increase inventory accuracy and reduce the incidence of shrinkage due to employee theft or error, says Stacey Shulman, American Apparel's VP of technology (see RFID Delivers Unexpected Benefits at American Apparel).

Now, the company is deploying the RFID solution at the approximately 180 American Apparel stores currently lacking the technology, as well as at every new store that it opens in the United States, Canada, Mexico, Europe, Asia, South America and Australia. By the end of this month, Shulman says, the retailer will already have equipped an additional 30 stores, with the goal of having them all fully RFID-enabled by the end of this year.


Stacey Shulman, American Apparel's VP of technology

According to Shulman, sales have increased at those stores already using RFID. What's more, she says, internal shrinkage has dropped by up to 75 percent at some RFID-enabled locations, and by an average of 55 percent overall. Shrinkage results from employee theft, as well as the loss of items due to human error, such as mistakes made during receiving—for example, goods being received but not recorded, or being moved to the sales floor without being entered into the system, or not being placed on the sales floor when intended, all of which can result in a loss of sales, or require the replenishment of those products. The RFID system, she notes, provides visibility that reduces that risk.

The retailer is employing Xterprise Clarity Advanced Retail System (ARS) software at each store, thereby enabling the verification of shipments, receiving and transfers from one location to another, the counting of inventory within a particular store, the ability to search for specific tagged items using handheld readers, the creation of fulfillment lists, and integrated POS functionality.

Each installation includes a fixed RFID reader within the receiving area, and a second unit to identify items being carried to the sales floor. A third reader is installed at the point of sale, in order to interrogate the tag of every items being purchased. In some cases, however, American Apparel's locations are concession stores located, for example, within a department store. A point-of-sale reader is not required in such cases, Shulman says, since the POS process is managed by the department store, and a single fixed interrogator installed within the back room is used for receiving and restocking.

For the most part, American Apparel is utilizing Nordic ID and Motorola Solutions handheld readers, as well as fixed interrogators provided by Motorola and Alien Technology.

RFID hangtags, made with RFID inlays supplied by Avery Dennison and LS Industrial Systems, are already being applied to American Apparel's products at the point of manufacture, Schulman explains. Once the goods are received at a store, all items are interrogated using the fixed reader at a receiving station, and that information is forwarded to the enterprise-wide Xterprise Clarity software residing on American Apparel's database. In that way, the store knows what was received, and when this occurred.

After being placed on the sales floor, the products pass a second fixed reader that captures each item's unique tag ID number and again updates the software accordingly. Every store is also furnished with two handheld readers, which employees can use either to perform an inventory check, or to locate a specific item within that store, via a Geiger counter functionality. When purchasing a product, a customer places that item on the sales counter, under which a desktop reader captures its tag ID and updates the inventory data in the Clarity software, indicating that it has been purchased.

In the future, Shulman says, American Apparel may opt to equip some stores with fixed doorway reader portals, to be used in conjunction with the existing electronic article surveillance (EAS) system to capture the tag IDs of any items that might be removed from those stores without being purchased. In that way, the retailer would know not only that something was being removed (thanks to the EAS system), but also which item (based on the RFID data).

Since the RFID system's installation at its existing 100 stores, Shulman reports, American Apparel has seen an increase in sales at those locations, owing to a reduction of out-of-stocks. When the solution is first installed, she says, it takes a store's staff and management several months to adjust to the new technology. "Once they're used to it and processes are stabilized, we see a sustainable sales lift," she states, though she declines to quantify that increase. In addition, she says, the in-stock percentage for those stores equipped with RFID is approximately 99 percent—in other words, 99 percent of all inventory is available for customers to purchase.

According to Shulman, American Apparel may also experiment with RFID technology in the fitting rooms of select stores, in order to better understand which products enter and leave those rooms, and how long they remain there.

Shulman will describe her company's deployment to date, as well as the return on investment that it has experienced with RFID, at RFID Journal LIVE! 2012, being held on Apr. 3-5, in Orlando, Fla. Shulman's presentation will take place on Apr. 4.