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Missing: Specialty Apparel Retailers
With the most to gain from item-level tagging, why aren’t these retailers giving RFID the attention it deserves?
Jul 30, 2006—July 31, 2006--Apparel and footwear retailers can get many valuable benefits, particularly at the store level, from item-level RFID. Those are the primary findings of studies conducted by Kurt Salmon Associates (KSA), addressed at length in the white paper "Moving Forward With Item-Level RFID in Apparel & Footwear." But no class of apparel retailers stands to gain as much from item-level RFID within the next few years as such vertically integrated specialty retailers as Aeropostale, Banana Republic and Talbots.
Oddly, many of the biggest names in this sector still have not stepped up to the plate. KSA has examined this phenomenon in detail—but before we look at the root causes, some of which are interrelated, here are the three reasons item-level RFID should be particularly attractive to specialty apparel retailers.
In-store deployment of item-level RFID is simplest within specialty stores. Department stores and mass merchants have disparate merchandise departments on their selling floors. That makes extending RFID-enabled processes across a critical mass of selling zones more cumbersome because it requires greater coordination. By comparison, the selling floor of a specialty retailer is more homogeneous. Merchandise recovery processes are less variable, making it easier for specialty retailers to introduce and extend new practices, especially those rolled out on a category-by-category basis.
Specialty retailers have the strongest financial incentive to manage inventory with RFID. Specialty retailers bear full financial responsibility for un-saleable merchandise and inventory in the pipeline. They, therefore, have the greatest incentive to use RFID to maximize sell-through, and to minimize the number of garments entering the dreaded markdown cycle. They also have the strongest incentive to streamline the amount of inventory in their pipelines—something the first wave of RFID adopters have been able to accomplish.
Given these potential benefits, why have specialty retailers been slow to wake up to and adopt RFID? KSA sees five main reasons, detailed on the following pages.
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