Missing: U.S. Apparel Companies

Apparel companies such as Portugal’s Throttleman, Germany’s Gardeur and Italy’s Griva are using radio frequency identification to improve their operations. Karstadt, Germany’s largest fashion retailer, and Galeria Kaufhof, a department store chain owned by Germany’s Metro Group, have tagged tens of thousands of apparel items as part of major pilots.

These companies know that RFID can help apparel manufacturers and retailers better manage their inventory, which is complex due to the large number of different sizes, colors and styles. So why aren’t apparel companies in the United States being more aggressive in exploring the benefits of RFID?

One reason is fear of bad publicity. Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), a nonprofit group opposed to the use of RFID, has relentlessly staged attacks on any apparel company using the technology. Privacy groups in Europe have not used the same tactics, and shoppers know that existing European Union laws protect their personal information.

Margins in the U.S. apparel market also are much thinner than elsewhere in the world, due to greater competition. This makes it difficult for retailers and manufacturers to invest large sums in new technology, even if it can deliver significant value.

For several reasons, though, we will soon see more U.S. apparel companies using RFID. First, Sam’s Club has announced that it will have all its suppliers, including apparel manufacturers, tag pallets and cases and quickly move to tagging items. Dillard’s, a major department store chain, also has been moving toward greater use of RFID, encouraging its suppliers to work with it to explore the potential benefits of the technology.

And new UHF systems, with longer read ranges and the ability to locate tags in 3-D, promise to lower the cost of deployments (see Product Developments on page 40). These systems are ideal for the apparel industry because a few antennas could cover an entire store or apparel warehouse and allow companies to determine when product is out of stock or misplaced.