Oct 05, 2020The RFID Lab at the University of Parma has been analyzing the global use of radio frequency identification in the fashion industry for more than 20 years. The result is a benchmark intended for use by companies seeking to deploy their own RFID solutions. Recently, the university added to that benchmark with a study of Netherlands-based fashion businesses that reinforces the trend in RFID technology growth.
The research, known as "Benchmarking RFID Adoption in Benelux with Worldwide Projects," was conducted by GS1 Netherlands for the university's RFID Lab, and it adds the experiences of 21 Dutch companies in 40 projects to the global benchmark. The study found benefits in sales and inventory accuracy, with a very small rate of cancelled deployments when compared to the results of previous studies, according to Antonio Rizzi, a professor in the University of Parma's Department of Engineering and the RFID Lab's director. This, he adds, may indicate that RFID technology is maturing.
GS1 Netherlands' Loek Boortman
GS1 Netherlands achieves several benefits from the research, says Loek Boortman, the organization's CTO. "It provides us with a great communication tool to reach a broader audience, not only in fashion but also in other sectors like FMCG and healthcare," he says. "We can now provide our Dutch member companies with a benchmark that previously did not exist in this detail."
The RFID Lab researches and educates on RFID's value in the retail and healthcare markets, with feasibility studies and return on investment (ROI) calculations. Since 2001, the lab has been tracking global RFID deployments and the learnings from those implementations, and its study is known as the "RFID Barometer in Retail." GS1 Netherlands' study found that RFID is not only boosting inventory accuracy, but can also enable omnichannel sales and improv the customer experience. The latest study determined that sales and the reliability of stock figures increased via RFID's use. More than 75 percent of respondents claimed that RFID provided inventory accuracy of at least 97 percent. These are among the most striking conclusions, Rizzi says.
The two organizations began planning the latest benchmarks at 2019's RFID Journal LIVE! conference, held in Phoenix, Ariz. "We started this partnership in fall 2019," Rizzi says. The GS1 Netherlands team heard him speak at the event regarding the benchmark for RFID adoption. With the barometer, he explains, "We are mapping why companies are adopting and use cases over time," as well as quantitative results such as labor, efficiency, inventory accuracy, sales percentage increase, shrinkage and cancellation rate reductions. Almost every company that participated indicated that it recognized a value in gaining better insight into inventory reliability. RFID is also being used to measure the efficiency of logistics business processes.
By contributing to the University of Parma's research, Boortman says, GS1 Netherlands provides more data to validate the benchmark research. "GS1 Netherlands is in close contact with the Dutch RFID projects reported on," he states, "much closer than the University of Parma every could be. This has a positive effect on the data quality and accuracy of the reported outcomes."
There are 185 records in the university RFID Lab's data from 120 companies, and it has now added 40 records from the Netherlands. To capture those records, GS1 Netherlands polled 21 GS1 members about their RFID deployments or pilots since 2013, and it conducted 41 interviews. The results reinforce previous findings, Rizzi says, with regard to the benefits RFID is bringing to retailers, especially during the COVID-19 pandemic. The pandemic, Rizzi says, has put pressure on logistics chains. RFID is increasingly playing a role in making operational processes more efficient, reducing manual touching of items and further improving business processes, especially in the fashion industry.
Before and during the outbreak, the GS1 research found that Dutch retailers were predominantly using RFID to prevent the loss of sales or canceled orders, and to improve in-stock reliability. Both the GS1 Netherlands research and other global benchmark studies, Rizzi reports, have found that companies have seen great opportunities in RFID to properly set up the omnichannel process. Such growth is mainly due to the opportunities that businesses see in such concepts as "click and reserve" and "ship from store."
University of Parma's Antonio Rizzi
The GS1 Netherlands study found that overall sales increased with the use of RFID by 3 to 10 percent, and the average reported inventory accuracy rate was more than 97 percent. The technology is reportedly reducing the amount of time required for operational processes, while increasing the accuracy of processes in the Netherlands. Participating companies reported that cancellation rates for online orders are reduced by RFID use, and some have said they've utilized the technology for visual merchandising and customer experience, such as magic mirrors.
"Fashion retailers are looking for new, innovative and interactive ways to give the consumer a good customer experience," Boortman noted in a prepared statement. That is now more topical than ever with the pandemic affecting shopping behavior, he added. "With RFID, you have the solution. From a personal welcome to relevant advice based on purchase history, assistance in the fitting room and fast checkout. From suggestions for combination pieces to insight into the store stock and smart fitting mirrors. It is fantastic to see that companies are now also discovering this potential of RFID."
The study found that 8 percent of retailers surveyed are conducting an RFID proof-of-concept, while 33 percent are still in the pilot phase, 12 percent have opted for phased implementations and 47 percent have already fully deployed the technology. "We mapped how the framework is evolving over time," Rizzi explains, as part of the overall barometer study. Of the core categories, he says, inventory accuracy is one of the fastest-growing use cases—led, in part, by omnichannel sales.
By 2012, Rizzi reports companies started to use RFID as the basis for omnichannel sales, and the technology has grown rapidly from there. "It means that from 2012 to now, this is one of the use cases growing fastest every year," he states. "Brick-and-mortar retailers are struggling to compete with online retailers, so they are using their stores not only as point-of-sale but as distribution center. In order to do so, they definitely need inventory accuracy at the store level."
The Netherlands data reflects that trend as well. "They are in line with our outcomes," Rizzi notes. "Both in terms of use cases and results, they confirm the results of our barometers." He added, however, that how stores experience their deployment journey may have changed. Among those involved in the GS1 Netherlands study, only two companies chose to halt their deployment before finishing, whereas the vast majority (19 participants) completed their full implementation.
The global study that began a decade earlier had different results. At the time, 48 companies said they had never moved beyond a first phase of deployment, while 40 had completed a second phase and 32 had proceeded straight to deployment. That reduction in the rate of in-completed deployments could indicate RFID has been a fully established technology, as opposed to the early-adopter status of companies in previous years. "Those very first pioneers," Rizzi says, had a higher rate of stopping their deployments.
With regard to the Netherlands data, Rizzi adds, "For us, the value is 40 brand-new records to our barometer," including use cases that reinforce existing outcomes "indicating our outcomes are consistent." He hopes the data will provide more support for businesses launching or planning RFID deployments or pilots. "I believe these results are very important if you have to develop an ROI calculation. "Those in early stages [of RFID deployments] don't have these numbers available. So we can provide these numbers."
GS1 Australia also recently provided benchmark results when surveying its own members, which were consistent with the RFID Lab's international barometer results. Regarding that research and the GS1 Netherlands study, Rizzi reports, "We were very happy with the results—it reinforced our outcomes." He adds, "They are consistent and can be leveraged by companies seeking quantitative results to answer 'Why should we implement?' and 'What are the benefits?'" As of 2020, he says, the lab has found that the potential RFID volume worldwide is 80 million tags—15 million of which are used in fashion, or 20 percent of all UHF RFID tags.
The GS1 Netherlands research is intended to be repeated every year, Boortman says. As a result, he predicts, "We expect to get a fact-based monitoring tool providing insight into the uses of the GS1 standards over time."
