Norwegian Apparel Company in Good Mood Over RFID

By Claire Swedberg

Moods of Norway boosted sales of men's shirts and suits by double digits during a six-month pilot at two stores using an RFID solution from Nedap, by ensuring inventory is accurate; the company has now rolled out the technology at 13 of its locations.

Scandinavian clothing company Moods of Norway (MoN) has equipped 13 of its stores with radio frequency identification technology to better manage its inventory. This deployment follows a six-month pilot that boosted sales at two stores—not only sales of tagged items, but also of other products as well. A 14th store is set to go live with the technology later this year.

During the two-store pilot (which consisted of tagging men's shirts and suits, and using a handheld reader to conduct inventory counts on the sales floor), the system not only provided 98 to 99 percent inventory accuracy, but also reduced the amount of labor employees spent performing manual inventory checks, thereby enabling more frequent checks. Those results, says Hans Petter Hübert, Moods of Norway's supply chain manager, were so impressive that the company is now investigating ways in which to expand its RFID usage beyond inventory tracking on the sales floor. The clothing firm is testing a fixed reader at the front entrance of one pilot store for the purpose of electronic article surveillance (EAS), and plans to install fixed readers in stores' back rooms to provide employees with a tool to support replenishment from the storeroom to the sales floor.

Thirteen Moods of Norway stores are using Nedap's !D Hand reader, paired with an iPod Touch, to perform inventory counts of men's suits and shirts.

Hübert says he had been aware of RFID technology and how it could be used for retail inventory management. At a GS1 conference held last year in Oslo, he began a conversation with Dutch technology firm Nedap about testing a solution. RFID technology, Hübert says, "is a no-brainer for a company like ours," which aims to replenish 70 percent of the items it sells as soon as any of those products are sold, and thus requires high inventory accuracy in order to ensure goods are replenished correctly. If replenishment does not occur, customers cannot purchase those items, resulting in a loss of sales revenue.

The company also wanted to add features enabling it to provide pick-up options to its online customers. Currently, online buyers of MoN products cannot visit a nearby store to pick up purchased goods, Hübert says, in part because the company needed a way to ensure that inventory accuracy is strong enough that it can guarantee every product will be available for each customer as he or she arrives. Since the firm had what it believes to be only 75 or 80 percent inventory accuracy, it could not be as confident as it needed to be that the goods would be available in the store when needed. The average industry-wide stock accuracy is below 70 percent, he says, so he believes that MoN had been doing better than many stores—but not accurately enough for management's liking.

In January of this year, MoN began testing a Nedap solution consisting of its handheld !D Hand reader, an Apple iPod Touch loaded with Nedap software, and a cloud-based server that hosts software for managing all collected read data that the iPod receives from the reader, via a Bluetooth connection. Nedap's Norwegian partner, Infratek, provided and installed the technology.

MoN chose to use Nedap's solution initially at two stores—one in Oslo and another in Stryn (about 500 kilometers [311 miles] to the northwest), located adjacent to the company's distribution center. The firm tagged two product categories: men's shirts and men's suits. Smartrac inlays with NXP Semiconductors G2iL chips were applied to incoming products for the spring season at MoN's DC. The tags were interrogated during stock checks after the tagged shirts and suits were placed on the sales floor.

During the pilot, staff members employed the !D Hand reader and iPod to conduct two in-store inventory checks twice weekly. The reader is designed to be simple to use and easy to maneuver, says Danny Haak, Nedap's RFID product manager. As an alternative to a larger, more cumbersome handheld, the !D Hand consists of a lightweight wand with a single button that a worker can press to capture tag IDs and forward that data to the iPod. The reader's simplicity was a primary selling point for MoN, Hübert says. The clothing company's sales staff, which consists mostly of young people, were well acquainted with iPod technology and Bluetooth connections, he adds, and thus had little trouble carrying the reader and iPod around the sales floor, following prompts on the iPod to begin collecting data about tags being read, and then forwarding that information to the cloud via a Wi-Fi connection.

Moods of Norway's Hans Petter Hübert

Prior to the pilot, each of the two test stores required 30 to 40 man-hours to perform inventory counts of all products on the sales floor. With RFID, however, inventory checks of the tagged items (representing about one-quarter of each store's inventory) could be accomplished within approximately 15 minutes, Hübert reports. During the pilot's early stages, he adds, another 30 to 60 minutes were required to reconcile the read data with expected inventory counts and then follow up with the store manager; as employees and management became used to the system, that reconciliation process was not needed as much.

In early July, MoN decided to roll out the Nedap system to 11 additional stores. That rollout was completed a few weeks ago, the company reports, and all 13 stores are now receiving tagged merchandise and using handheld readers to take inventory. In most cases, Hübert reports, the inventory count of tagged items has become accurate enough that staff members no longer need to conduct inventory checks twice a week; instead, the counts are being scaled back to once a week or twice monthly.

With its RFID expansion to 13 of its stores, the company is also tagging a third category of goods: men's pants. The garments' manufacturers, instead of MoN’s DC, are now tagging all three apparel categories. MoN intends to RFID-tag all children's, sports, women's and men's clothing, as well as footwear, for the spring and summer 2015 seasons.

Moods of Norway next intends to integrate the RFID software with its own enterprise resource planning (ERP) system, so that inventory data collected from readers will automatically be forwarded to the company's back-end software.

MoN also intends to begin using RFID to record when goods are moved from the backroom to the sales floor, thereby ensuring that there is an accurate inventory record of the goods stored in the backroom, and that replenishment in that backroom is carried out when needed. To enable this, Haak says, Nedap will provide its !D Top wall-mount reader, which comes with "dynamic beam steering" to track the angle from which a tag's RF signal is received, in order to identify in which direction a tag is moving. This, he says, will enable the firm to understand if an item is leaving a store, or if it is moving from the backroom to the sales floor. The read data will be sent to the cloud-based server, where Nedap software updates each item's status to indicate if something has left the backroom and must, therefore, be replenished.

Nedap's Danny Haak

At one store's exit, Moods of Norway is currently testing an !D Gate hybrid 8.2 MHz EAS and passive ultrahigh-frequency (UHF) RFID reading device provided by Nedap. In this case, the UHF reader captures the ID number of any tagged product leaving the store, and thereby updates inventory levels to reflect that the item is now missing and must be replenished.

With the use of RFID, Hübert says, the pilot stores not only achieved a double-digit sales increase for the tagged product categories, but also showed better general performance compared with MoN's other store locations. He attributes this to employees being happier with their work since they can spend more time with customers and less time searching for missing stock. "I hope to see the same response in the other stores," he says. Haak also believes such sales lifts can be explained, in part, because a customer who finds one product available at the store is more likely to buy accompanying items. The company also hopes, in the near future, to enable online customers to pick up purchased goods at neighboring stores, thanks to the improved inventory accuracy resulting from its adoption of RFID.

"A main goal is to take away non-value-adding activities from the store employees," Hübert states. "The time we can free up [by] using RFID in the stores, the store employees will use on what they love to do: providing excellent customer service."