VIL: Fashion retailers unnecessarily cautious about RFID technology

RFID labels are still little used by Flemish fashion retailers. This creates a lack of insight into stocks. This is according to research by the Flemish Institute for Logistics (VIL).

Thanks to these smart labels, products can be tracked from the manufacturer right through to the till. The advantage over standard barcodes is that RFID tags can be scanned fully automatically and that the labels can contain much more information. As fashion retailers were still making very little use of the tags, the VIL launched the ‘In-store Improvement’ project in December 2014 to speed up the transition process. According to the VIL, rapid implementation of RFID was essential to provide the fashion industry with insight into which items, in which colours and sizes, were located where within the supply chain. Stock accuracy proved to be a weak point for many; knowing the location of only 70 per cent of items in-store is not uncommon.

Stock accuracy
This week, VIL is presenting the results of the project. The companies that adopted RFID technology are reported to have achieved significant improvements. For instance, stock accuracy rose from an average of 63 per cent to 95 per cent. Out-of-stocks in shops fell by 50 per cent. As a result, sales increased by between 2 per cent and 20 per cent. Shops have reportedly been able to avoid urgent deliveries and have boosted customer satisfaction. As well as improving stock management, the technology also enables better control over theft. The shop has a real-time view of which items are leaving the premises and can immediately adjust its stock levels and take the necessary action.

High investment costs
According to VIL, despite an improvement in results, fashion companies are reluctant to implement the technology due to the high investment costs. “Just get started as an individual company,” says Jan Merckx of VIL. “We have weighed up the costs and benefits and tested various technologies at the participating companies. The business cases show that the return on investment in the technology ranges between 1.2 and 2.9 per cent. “Furthermore, the calculation did not take into account the demands that omni-channel places on businesses, so the benefits are likely to be even higher,” said Merckx.

Editorial LogistiekProfs