Tyco Wins Chain-wide Contract From Inditex

By Claire Swedberg

By the end of 2016, Tyco's EAS-RFID hard tags and RFID tag detachers will be deployed at all of the retailer's approximately 2,000 Zara stores.

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Tyco Retail Solutions has announced the role it is playing in Inditex Group‘s RFID expansion plans. The fashion retailer is already using Tyco’s Sensormatic dual-technology RFID/Acousto-Magnetic (RFID/AM) hard tags, as well as the company’s RFID-enabled tag detachers, at 700 of its Zara stores, and is in the process of deploying those same tags and detachers at its approximately 1,300 other Zara stores around the world, according to Tyco Retail Solutions. Tyco’s announcement follows last week’s comments from Pablo Isla, Inditex’s CEO—who, at the company’s annual general meeting, described how the Inditex uses RFID now, and how it plans to deploy the technology in the future (see Inditex CEO Announces RFID Expansion Plans). Independent of that, Tyco Retail is launching pilots with approximately 20 other global retailers and brands to use its hard tags and recirculation services for the recycling of tags, and about one-third of those companies will test RFID as part of those pilots.

Inditex is one of world’s largest clothing retailers, with more than 6,300 store locations worldwide, including such brands as Zara (its biggest division), Massimo Dutti, Bershka, Pull and Bear and Stradivarius. The group owns the majority of its stores, and designs and manufactures almost all of its clothing. According to Randy Dunn, Tyco Retail Solutions’ director of global sales and professional services, the company initially launched an electronic article surveillance (EAS) system, provided by Tyco, to manage the shrinkage of products at some of its locations—including the Zara stores—more than a decade ago. Tyco furnished its 58 kHz acoustic EAS hard tags to factories that produce Zara’s merchandise, which then applied the EAS tags to the garments at the point of manufacture. Inditex also installed Tyco EAS portals at the stores’ entrances, to sound an alert if the hard tag was not detached from a garment during a purchase, potentially indicating that it was being stolen.

Tyco Retail Solutions’ Randy Dunn

By about 2009, Dunn recalls, Inditex’s management had begun considering how RFID technology could be used with the EAS hard tags to obtain inventory-based data in addition to providing loss prevention. By using the existing Tyco hard tags with modification for RFID, he says, the company would not need to install new portals to read the tags at the store egresses, since the EAS gates could continue providing that function.

Tyco worked with Inditex to develop the resulting Sensormatic RFID/AM hard tag that comes with a standard EPC ultrahigh-frequency (UHF) passive RFID tag, as well as the functionality of its existing acoustic EAS tag. Dunn declines to name the company providing the RFID chip used in the hard tag. At the same time, Inditex developed its own handheld readers for use at its distribution centers and stores, based on modifications to the existing PDA devices that staff members used at those locations. It also developed software to manage the collected read data from those handheld readers.

Tyco ships RFID EAS hard tags to Zara clothing factories, which then attach a tag to each finished garment. The hard tags are applied to clothing at the factory, but are not used until the goods arrive at one of Inditex’s DCs. There, workers use the handheld reader to encode a unique ID number to the tag and link that ID to the garment’s stock-keeping unit (SKU) in the store’s inventory-management software. When the apparel is received at one of the more than 700 Zara stores using RFID, a worker interrogates the tag using a handheld reader to indicate in the software that the item was received. The store’s staff can also use a handheld to read the tag at other times, to perform inventory counts at the store.

When a customer purchases a garment, a sales associate removes the attached hard tag via a Tyco detacher with a built-in RFID reader antenna wired to an interrogator that captures the tag’s ID and forwards that information to Inditex’s software, thereby indicating that the item was sold. The retailer then uses this information to replenish that store’s inventory.

Once the tag is detached from the garment, the store sends it to one of Tyco’s three or four recirculation centers, located in Europe and Asia. Each used tag is then cleaned and its ID is erased from its memory. The tags are tested to ensure that both the EAS and RFID technologies are functioning, and are then shipped to a Zara clothing factory for reuse.

Tyco recycles Zara hard tags at an annual rate of hundreds of millions, Dunn says.

The RFID-enabled hard tag technology was deployed in phases, Dunn says, beginning with select Zara stores in Spain, and then expanding to Portugal, the United Kingdom and beyond. The company established “school stores,” in which the systems were installed and fully functional, to act as models for other stores during their own deployments.

While the RFID system has been initially launched at more than 700 stores throughout 22 countries, Inditex intends to expand the technology to all 1,991 of its approximately 2,000 Zara stores by 2016. It also plans to roll out the solution across its other chains.

According to Dunn, the deployment of RFID by such a large retailer bodes well for the RFID industry as a whole, as well as for companies like Tyco. “As you start to think about leveraging loss prevention, we believe there is a huge opportunity for information-based loss prevention,” he says—namely, using RFID to identify which item may be missing from inventory, and thus helping the company understand where inventory problems may exist.

In the future, Dunn says, the company could opt to employ the technology to boost supply chain efficiency and improve the customer experiences (by providing “magic mirrors” in fitting rooms, for example). Although Inditex is not currently using RFID readers in its EAS portals, Tyco can provide that functionality, Dunn says. Some of Tyco’s retailer customers could then use it to not only trigger an alert (via the EAS technology), but identify which item had been removed, for the purpose of replenishment.