Aug 21, 2006When I was a reporter for the now-defunct Industry Standard, software companies such as Ariba and CommerceOne used to tell reporters and potential customers that their self-service Web-based purchasing system cut the cost of a transaction from nearly $100 for manual processing to less than a dollar for electronic processing. Lots of companies went out and purchased those applications, only to find that in many cases they had to keep their manual systems in place and pay for support for the electronic system. They didn’t get nearly the savings they expected.
Maybe experiences like that explain why apparel and footwear companies are not piling on the RFID bandwagon. Speaker after speaker at last week’s RFID Journal—AAFA Apparel & Footwear Summit said using radio frequency identification cut their costs and increased their sales. Some figures mentioned during the event were 20 percent or more for sales increases in stores or departments that used RFID. In some cases, companies did pilots and got great results, and the response from management was that the RFID team needed to do more testing to see if the results in one store hold up across dozens of stores.
I certainly understand the need for more testing, and to be sure of the ROI before investing millions in a new system. But I would have thought that companies would be more eager to get on with expanding pilots and verifying that the sales lift is real and applies across many stores, not just one. If someone told me we could use a certain technology to boost subscriptions 20 percent, I’d be very eager to test it and get it up and running, if the tests showed it worked as indicated by the initial pilot.
During the conference last week, speakers discussed a number of reasons why companies are not moving more quickly to adopt RFID. These included fear of bad press related to privacy concerns, lack of maturity of the technology, lack of frequency standards and tag costs (see Apparel & Footwear Summit Attracts Wide Audience).
Companies have lots of demands for investment dollars, lots of projects to take on and a lot of issues that absorb management time. Without a major company that’s issued a mandate, the threat of government regulation or a single compelling business problem, companies are not going to move rapidly to deploy RFID systems. But no one at the event doubted that RFID is coming to the apparel and footwear sector in a good way.
One apparel retailer said it would make RFID tagging voluntary at first, but that it would eventually mandate it because that would be the only way to get all suppliers on board. In the meantime, it makes sense for all companies in the sector to explore where the technology can benefit companies and start to use it where it makes sense. Then, they’ll be ready to move quickly and capture some of the extraordinary benefits early adopters have been talking about.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.