Apparel Tagging Isn’t All About Wal-Mart

By Mark Roberti

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The news that Wal-Mart Stores plans to track most of its apparel with radio frequency identification technology based on the Electronic Product Code (EPC) standard stirred two very different reactions among RFID technology providers. Some don’t believe the retailer will follow through, based on its previous false starts. Others are sure Walmart has the strategy right this time, and that its decision to use RFID will spur most other apparel retailers to adopt the technology within the next couple of years. They’re all probably wrong.

First, let’s consider why this is probably not just another false promise from Walmart. We detailed five reasons on our Web site (see Walmart Takes a New Approach to RFID), which we’ll summarize here:

1) Walmart is now focused on where EPC RFID can deliver the most value. The retailer understands that the greatest benefits come from tracking products with a wide variety of options, to better manage inventory so the items are always in stock.

2) Business managers are driving the effort. Rather than force all departments to use EPC RFID, Walmart is letting business managers within departments determine when it makes sense to begin working with suppliers to tag products. When an initiative is launched to tag a new product category, the project starts with buy-in from the business managers.

3) Walmart is taking a more collaborative approach with suppliers. Rather than forcing suppliers to tag items, the retailer is proving the value and encouraging suppliers to tag.

4) Walmart is eating its own dog food. The retailer is using the technology in its own apparel supply chain, so it knows where suppliers will benefit.

5) Walmart has a clearly thought-out plan and is taking steps to implement it. With five years’ experience of tracking goods using EPC RFID, the retailer knows tagging isn’t a simple matter, and it is taking a more deliberate approach this time.

So yes, all signs are that this time will be different. But will it cause a “tornado”—rapid adoption of a technology across an industry—to use Geoffrey Moore’s term? Probably not. During an RFID Journal webinar, Moore—author of Crossing the Chasm, Inside the Tornado and other books on technology adoption—said no one company, regardless of its enormity, can create a tornado. For a technology to undergo rapid adoption, he says, there must be a confluence of factors: a global standard, compelling business need, market leader and critical mass of end users.

A couple of these conditions do exist in the apparel sector. Almost all retailers use ultrahigh-frequency (UHF) EPC Gen 2 technology—it is essentially the global standard. And improving inventory management and shelf replenishment is clearly a compelling business need (inventory accuracy is often less than 65 percent). But no market leader exists yet, though Avery Dennison and Motorola appear to be emerging as the hardware “gorillas.” The biggest missing piece: end-user critical mass.

In addition to Walmart, several retailers—including Banana Republic, Dillard’s, JCPenney, Jones Apparel and Macy’s—have been exploring the potential of EPC RFID technology to transform their apparel operations. But if these companies don’t adopt the technology, there will be no tornado. The failure of Albertson’s, Target, Tesco and others to adopt EPC RFID to manage consumer packaged goods left Walmart alone in its earlier RFID endeavor and made adoption impossible for the retailer, because it meant suppliers would have had to manage separate inventories for Walmart. The same will be true if retailers don’t adopt RFID to manage apparel inventory.

RFID Journal believes the business benefit of RFID for apparel management is so compelling that numerous retailers, including several of those named above, will move forward with rollouts over the next 12 to 18 months. That momentum will continue to accelerate, and within the next four years, RFID will reach critical mass and there will be broad adoption within the apparel sector. Walmart alone, though, will not drive RFID adoption in the apparel industry.