Nov 02, 2011Last week, I spoke at RFID Forum 2011, hosted by the Voluntary Interindustry Commerce Solutions Association (VICS) and the Council of Supply Chain Management Professionals (CSCMP). The annual event has focused largely on the benefits of employing radio frequency identification for apparel retailers, but has been expanded this year to cover suppliers as well. In the future, the forum also intends to involve other categories of retailers and their suppliers.
During my presentation, I explained why RFID technology is ideally suited for tracking individual apparel items from the moment they are manufactured until they are sold, and I provided an overview of some international deployments. One audience member asked whether I think the United States is ahead, behind or about equal with other regions in terms of adoption pace, and I responded that this country is ahead of the game.
Wal-Mart Stores (which has reported $432 billion in annual revenue) is already tracking men's jeans and basics at all of its stores (see Wal-Mart Relaunches EPC RFID Effort, Starting With Men's Jeans and Basics, Wal-Mart Takes a New Approach to RFID and Wal-Mart CIO Still 'Bullish' on RFID). JCPenney (with a revenue of $18 billion) is tracking bras, jeans and shoes at all of its 1,100 stores—and expects to tag all items within four years (see Mischaracterizing JCPenney's Approach). And Banana Republic, part of The Gap (a $15 billion company), has rolled out the technology to 100 stores.
American Apparel ($527 million in revenue) plans to be in 100 stores by the end of this year (see RFID Delivers Unexpected Benefits at American Apparel). Macy's Inc. ($26 billion in revenue) plans to roll the technology out to all 850 Macy's and Bloomingdale's stores next year (see Macy's Inc. to Begin Item-Level Tagging in 850 Stores). Lord & Taylor (which last reported $1.57 billion, before being bought by a private-equity firm) is rolling out a sample shoe-tracking application (see Lord & Taylor Tags Shoes, Boosts Sales). And Dillard's ($6 billion), Jones Apparel ($3.7 billion) and others have been conducting pilots, and appear close to moving forward with deployments (see Dillard's Gears Up for Item-Level Pilot, Dillard's, U. of Ark. Study Quantifies RFID's Superiority to Manual Inventory Counts and Jones Apparel Group Plans RFID Pilot in Nine West Stores).
There are some item-level tagging projects going on in Europe. Our last two RFID Journal Awards for Best Implementation went to two European retailers—Gerry Weber International ($690 million) this year (see Gerry Weber's Pain-Free RFID Revolution), and Charles Vögele ($1.6 billion) in 2009 (see An RFID Fashion Statement). But most European retailers adopting RFID tend to be either smaller boutiques—such as NP Collection (see Finnish Retailer Gets Quick ROI on Item-Level RFID, Finnish Fashion Designer Begins Item-Level Tagging and Clothing Designer Brings RFID to Its Shoppers)—or midsize chains that make their own apparel. Few major apparel sellers are adopting RFID in Europe.
Moreover, there is nothing like the VICS Item Level RFID Initiative (VILRI) in Europe. Most major apparel retailers in the United States, including the majority of those mentioned above, belong to VILRI, which is now open to international retailers (see VICS Item Level RFID Initiative Enters Phase II, VICS Item Level RFID Initiative: An Update on the New Business Model and An Update on RFID in Retail and the VICS Item Level RFID Initiative).
Even more important, VILRI is helping the industry to move forward together. This is critical, because Walmart's experience proved that even the world's largest retailer can not adopt RFID alone. Many observers surmised that Walmart had backed away from RFID a few years ago because it had learned that there was no value in tagging pallets and cases. But I believe that's wrong. There was value for Walmart—but the problem was that it was a burden on suppliers to tag some pallets and cases for Walmart, but for no one else. The fact that no other mass-merchandise retailers moved forward meant that Walmart had to either force suppliers to do something that was costly for them, or shift gears. It smartly chose the latter option.
VICS and GS1 funded research to determine RFID's benefits for apparel retailers, which made retailers interested in the technology. Now, the organization is educating more retailers about the benefits and promoting adoption, so that the industry can move forward as a whole. In addition, VICS and the American Apparel & Footwear Association (AAFA) are funding research to determine the benefits for suppliers. The expectation is that there will be supplier benefits, which will encourage them to move forward.
Geoffrey Moore, the author of Crossing the Chasm, has postulated that when the use of a new technology reaches critical mass in a particular industry, then all who had previously ignored the technology are likely to suddenly adopt it without considering the return on investment. The U.S. retail apparel industry is now moving toward critical mass, after which the remainder of the global apparel sector will most likely follow.
Once apparel tracking is widely adopted, mass-merchandise stores such as Walmart, as well as department stores such as Macy's and JCPenney, will move on to other categories. And retailers that sell sporting goods, electronics, books and other products will likely begin adopting the technology as well.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.