RFID in Apparel Industry: What is it, How it Works and the Benefits.

What is RFID?
Radio Frequency Identification, or RFID, is an identification or tagging method that is similar in function to a bar code on an apparel product or shipping carton.

The tags can be read through packaging and cartons without the line of sight necessary for reading barcodes. RFID technology has three components: microchip tags that carry the data, antennas that send the data, and readers that interpret the data. Cartons or products using RFID technology carry a transponder made from a microchip attached to an antenna like the one pictured here. It can be very small but read distance performance will depend on size. These tags can be placed in an apparel product without affecting its comfort or look, for example, the tag might be in a seam or hem or in a paper carton label. The RFID readers can be placed in the entry of a warehouse and, depending upon the size and frequency of the RFID used, it can be read up to 20 feet though most in use today read only about 2 to 10 feet.



How is RFID affecting the apparel and sewn products industry?
RFID labels are smart labels that can provide information for a number of applications in the apparel supply chain. Their unique information can be captured automatically once the labels are applied at product inception, and the information is highly accurate and secure. Some RFID can be modified at stages of the supply chain using the interaction between the microchip and reader software. RFID is traceable or can be tracked to provide a production and inventory control system, used for “smart shelves” real time inventory, retail security system, and even as an authentication to identify counterfeiting of brands.

What needs to happen before RFID use is widespread?
RFID is in its infancy and there are several roadblocks to its sweeping implementation. First, there are many versions of RFID technology that operate at different radio frequencies and require different software and readers. One or several frequencies need to be agreed upon so that there can be interoperability between retailers, manufacturers, and distributors using only one set of technologies. In addition, the cost of the technology needs to be reduced. Right now, it costs about 40 cents per chip as compared to 4 cents for a barcodes. The cost of RFID readers and software also need to be considered.

Standardization is underway in the organization of data into an Electronic Product Code (EPC), currently a voluntary standard. The EPC, similar to the UPC for barcodes, includes a header and three sets of data: manufacturer id, SKU, and item unique code, for a total of 96-bits of information.
Privacy has become an issue as the microchip will remain in the product for its lifetime. Several consumer activist groups are concerned that the consumer’s privacy will be compromised as their activities with the product could be followed by the technology. Industry has countered this concern by developing systems to automatically deactivate the microchips at time of purchase.

When will RFID be implemented?
RFID will be implemented at the carton level first, as this is where the greatest cost benefit lies and where it will be the easiest to implement.

The use of RFID to enhance the shopping experience and streamline retail operations has been a near decade long discussion itself.  In 2004, Wal-Mart issued its now famous mandate, requiring its top 100 suppliers to apply RFID tags to shipping crates and pallets to drive efficiencies into its supply chain.  Wal-Mart and others proposed that this technology would ultimately find its way to the retail floor to provide item-level inventory accuracy and real-time visibility into inventory levels and purchase patterns.  While Wal-Mart’s supply chain RFID initiative did not pan out on its initial time table, it kicked off a high level of interest in RFID technology from retailers and retail industry suppliers.

So here we are.  What’s new?  Well, quite a bit actually.

RFID continues to be explored for a variety of uses within the retail market.  Top among them, according to a report recently published by the Aberdeen Group, include process efficiency, product and demand visibility, shrink management, and increasing profits.  While these may not be new goals for many retailers, one very important point Aberdeen makes is: “The RFID industry finally has a portfolio of solutions (including tags and readers) with a form-factor that is broad enough, stable, and standards-compliant such that it applies to and satisfies the diverse needs of the retail environment.” This statement can’t be ignored.  It is clearly stated by Aberdeen believes that the technology itself is no longer barrier to entry.

A second area of interest is the rate of adoption within the retail market.  According to a recent blog posts from VDC Research, the retail market will account for only 6-7% of the total global revenues in 2010 – out of a $4.2 billion market. Yes, a small percentage of the entire market, but for RFID vendors this should be viewed as an opportunity to innovate!

So where will this innovation come from?  Will Wal-Mart’s recent announcements to use RFID to track jeans and underwear to improve its inventory be a tipping point for retail industry adoption of the technology?   Will smart signs and smart shelves become commonplace in retail stores?  What will the magic mirror tell us the next time we stand in front of it?

PSFK resized 600Over the next several months, we’ll explore areas within the retail market that can be impacted by RFID.  In the meantime, take a look at this incredible, thought provoking presentation developed by New York City based trends research and innovation company PSFK, titled – you got it – the Future of retail.

PSFK invites us to: “…think less about real estate, staff, footfall and online stores and start thinking about the entire world as a store; one in which we can easily make instant purchases regardless of time and place. Driven by technology, the web, community and the search for ever-richer experiences, the world of shopping is undergoing a sweeping transformation.”

Sound familiar?

Sources: tx.ncsu.edu and RFID.thingmagic.com

RFID CASE STUDY

RFID Solutions in Apparel

RFID TECHNOLOGY VIDEO

RFID IN FASHION

Advertisements

Leave a comment

Filed under Business, Fashion Industry, Fashion Marketing, Fashion Retailer, Management, Marketing, Marketing Mix, Marketing Strategy, Merchandising, Technology, Video, Viral Video

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s