Nov 02, 2012Canadian luxury leather goods retailer Danier Leather is piloting a radio frequency identification system at three of its Toronto-area stores, intended to ensure that products are replenished on the sales floor as they are sold to customers, as well as reduce the number of labor hours related to counting inventory. Since installing Truecount's RFID solution at two stores this summer, and at the third site in September, Danier Leather believes it can reduce inventory count times from about 15 hours to less than one, according to Phil Cutter, the retailer's VP of information technology and chief technology officer. But his company's greatest priority, Cutter says, is to improve the rate and accuracy of replenishment on the sales floor. The company sells its own line of high-value leather goods, such as jackets, purses and briefcases. If the items on the sales floor are replenished from the back room in a timely fashion, he notes, that lack of replenishment could lead to a loss of sales.
Danier operates 90 stores, including outlets and mall sites, with the volume of sales varying at each location. Across all of its stores, the company already has a very low shrinkage rate, Cutter says, largely because it conducts regular inventory counts at each site. Some counts are carried out as often as once weekly, while others are performed once a month or twice annually. The process is time-consuming, however, and does not provide a view into how quickly sales-floor inventory is replenished from the back room. With the Truecount system, says Bryan Tatoff, Danier's senior VP, chief financial officer and secretary, "as soon as an item is sold, we receive a replenishment list," which is then displayed at the point of sale and on a back-room computer monitor.
Prior to launching the pilot, Danier had sought an automated system that could provide greater visibility into which products were on the sales floor, as well as when they arrived there and when they were sold. The Truecount solution provides that data, thanks to an ultrahigh-frequency (UHF) EPC Gen 2 passive RFID tag attached to each product and read by a combination of handheld and fixed RFID interrogators.
Initially, the pilot was launched at stores in Mississauga and Toronto. Based on the preliminary success at those locations, the system was also installed in Burlington a month ago. Although the pilot was intended to conclude during fall 2012, the company chose to continue testing it throughout the busy seasons—namely, fall and winter. Once that is completed—in February 2013—the company plans to begin reviewing the resulting data in order to determine whether the technology has improved replenishment rates and thereby increased sales.
In some cases, products arrive from another store, untagged. When this occurs, workers attach a tag, read it and enter the data into the system.
When moving an item from the back room to the sales floor, a staff member carries it past a fixed Motorola FX7400 reader. The device captures the tag's ID number and forwards that information to the software via a cabled connection, indicating that the product is now on the sales floor.
At the point of sale, a second FX7400 reader, installed under the sales counter, interrogates the tag a final time, thereby indicating that the product has been sold, explains Zander Livingston, Truecount's CEO and cofounder. The software then determines if the specific item (such as a medium-size men's jacket, for instance) has dropped below a minimal level in the storefront. If so, the software displays an alert on computer screens at the point of sale, as well as in the stock room, indicating that it needs to be replenished. The tag is then read when the required quantity of goods are moved past the reader between the stock room and sales floor, and the system updates that status and removes the replenishment alert.
At specified intervals, according to the store's existing inventory count schedule, workers also conduct their usual count manually, and then walk the floor carrying the RFID handheld reader, in order to compare the results. To date, that RFID-based count has taken less than an hour to complete, as opposed to the manual count, which requires 15 hours for the same number of items.
According to Tatoff, the system has already proven itself in terms of reducing inventory count man-hours, while the sales and replenishment rates would require analysis once the pilot is completed. If the results indicate that the faster replenishment results in sufficient increased sales to meet the company's return on investment (ROI) targets with the Truecount system, Cutter says, the solution will be installed at all of its stores.
If the company proceeds with a full-scale rollout, some details have yet to be determined, such as where the tags will be attached (either at the point of manufacture, in Asia, or at the distribution centers in Canada).
Danier Leather's approach to RFID—piloting the technology initially at several stores—is highly effective, Livingston reports. "That's the best way for a company to approach this kind of thing," he states. Too often, he says, retailers want to research a technology and then install it without the piloting process. "If you run a pilot, you'll have first-hand experience," he says, noting that "every store is different." As such, he adds, each company may need to install and utilize the technology differently to suit its existing operations and facilities.
