Jan 04, 2019RFID use for fashion and apparel retail in Europe has reached the early majority phase of adoption, according to a decade-long study led by Italy's University of Parma. The study, titled "RFID Barometer in Retail," examined approximately 160 printed accounts of RFID deployments, ranging from 2001 to 2018. The report finds that in retail, the days of early adoption are past.
Companies installing RFID systems are now less likely to be technology innovators, the report indicates, and are instead following the lead of early adopters. Whether deployments are just starting or are permanently installed, the study finds the focus now increasingly centered around out-of-stocks, inventory accuracy, process automation, stock visibility and replenishment from the back room, while omnichannel sales are emerging as a new use case. Retailers that aren't already testing or adopting RFID risk falling into the "laggards" category, and potentially falling behind their competitors, according to Antonio Rizzi, the study's co-author and a professor at the University of Parma's Department of Engineering and Architecture.
The researchers found that the retail industry is far ahead of other sectors when it comes to RFID use. In fact, 75 percent of UHF RFID tags are sold to this industry. Because the market represents about 80 billion clothing and accessory items sold annually, the number of tags used will be significant in the future as well, they concluded, as will the number of deployments.
The study offered a review of RFID deployments in fashion and apparel in literature and publications, including articles and case studies published by RFID Journal. The group studied the experiences of companies in RFID pilots and deployments, and also considered the practical implications for the fashion and apparel retailer market throughout Europe. Rizzi presented the study's results at this year's RFID Journal LIVE! Europe 2018 conference and exhibition, held in November. "The research [focuses], on one hand, on monitoring RFID adoption status in the industry, and on the other hand, how use cases are evolving over time," Rizzi says.
The first RFID deployments took place in the United States in the 2000s for streamlining logistics, eventually evolving to the item-level tracking of goods at stores from back rooms to shop floors. Joint university research with the University of Wuerzburg began in 2014, which involved collecting data about deployments back to 2001. "The goal of our study was to build up a comprehensive, up-to-date and well-structured taxonomy for use cases of RFID in fashion retail," Rizzi says, "based on extensive literature review." Since then, the continued deployments were evaluated and analyzed up to this year. The research team also created a database describing projects, their status, proof-of-concepts and full deployments.
Sources for the study, in addition to RFID Journal, included trade publications, newspapers, websites, scientific papers and reports, and conference presentations. The group studied 149 deployments at a total of 97 companies and 23,400 stores that were carried out between 2001 and 2018, including those at Decathlon, Walmart, Gucci, Jack Wills, JCPenney, Diesel and Miroglio Fashion. The deployments also included 89 systems integrators, as well as reader and tag vendors. More than half of the deployments studied were based in Europe, with the rest located in the United States and beyond.
Of the use cases evaluated, the researchers found that 22 percent consisted of proof-of-concepts, 32 percent were in the pilot phase, 27 percent were using a phased deployment approach and about 14 percent had completed full deployments. The largest percentage of tags being used (59 percent) were price labels with built-in EPC UHF RFID tags. Care labels, sewn-in tags and hard tags were each around 6 percent, while for a quarter of the uses cases, the type of tag was unknown.
The group studied the use of RFID for six categories: shop floor management, customer relationship management, marketing and promotion management, logistics, inventory and supply chain, and brand protection. According to Rizzi, the group has witnessed an evolution in RFID since 2001, when initially a small number of proof-of-concepts were under way to improve supply chain visibility, inventory accuracy and shop floor replenishment. By 2012, the number of pilots had increased, while full deployments were under way and the number of applications increased from the original three to 16. This year, RFID was being used to address 18 use cases, including returns, omnichannel retailing and process automation.
Above all other industries, Rizzi says, the apparel retail market may provide the most compelling use cases for RFID technology. The products have a limited sales window, since fashions are seasonal and fast-changing, and the high number of stock-keeping units (SKUs) make the environment complex and, therefore, able to gain value from RFID. Products rarely include metal or liquids, the two materials that pose challenges for RFID transmission.
The benefits for those using RFID have included reduced product processing times, increased inventory accuracy and decreased inventory tracking times. When it came to inventory time reduction, in fact, 41 companies said they have achieved such benefits, while five indicated that the reduction was 90 percent or higher, with others reporting a decrease between 60 and 100 percent. They also indicated benefits in sales due to improved inventory accuracy, with 19 reporting that RFID had reduced shrinkage.
The study will continue in the upcoming years, Rizzi says, adding "This is something we will constantly update year after year." One recent development the group identified was an increased use of RFID for omnichannel sales fulfillment. "What is meaningful, in my opinion, is that in 2015, we saw only eight companies declaring they were using RFID for omnichannel." At present, he says, the rate has increased to 28, and he expects that number to continue trending upward.
Rizzi speculates that the reasons the retail industry is driving RFID adoption include the high number of product SKUs, the dynamic nature of product movement, and fashion changes that require goods to continue flowing to customers in store fronts, as well as for online purchases. The research paper is available here. For those who have yet to deploy RFID, Rizzi warns, "The longer they wait, the further they will be behind their competitors."
