RFID technology has a long history in the retail industry but due to the high costs and investments, it has always been prohibitive for medium sized companies in comparison to other solution such as barcode labels. Nevertheless, taking into account the costs-benefits considerations and the tide looks turning, probably this is the right time for small-medium companies to deploy the full potential of this technology. RFID is the acronym of radio-frequency identification and is a well-known technology that is currently used by some of the market leaders in the fashion industry mainly within their shops to track the movement of the goods in their retail spaces and their warehouses. Due to miniaturization, increased reliability and lower costs, the definition of international standards of this technology is becoming more popular and is spreading in previously uncovered areas. The trend of market value for this technology corroborates these observations, with RFID market value expected to double in the next 5 years. The penetration of the RFID technology in the business world is widespread, but fashion companies are mainly used for track tags at item levels, which can be both incorporated in the item of clothing and in its label.
Oberalp is now ready to investigate the full potential and benefits of RFID, through the distribution brand Underarmour, who is willing to launch a pilot project to exploit RFID technology in its shops. A prototype is currently at the stage of being finalized and the expectation is to have a wide deployment of this technology ready by the summer season 2020 in the shops all over Italy. The focus will be initially for the shop in the shopping Mall OrioCenter/ Bergamo, one of the biggest in Europe. The Group aims to test a new way of managing the inventory and at the same time increase the efficiency and accuracy in goods handling, both for the inbound and the outbound processes. The change will be drastic and allow a more frequent inventory, that could theoretically take place every week in comparison to the current yearly count, with much less efforts. The resulting accuracy will benefit both the— replenishment mechanisms and the seasonal changes—with their logistics inbound and outbound movements. A second important factor is given by the data that can be collected in the shop, thanks to RFID technology. This data can be used centrally to steer brand’s decisions and support different centralized functions. For example, it will be possible to map the position of the goods and use this information for merchandising considerations, analyzing best and slow sellers according to the time spent by the goods in the exhibition area, and according to their position. Other uses are then also connected with the protection against theft, with the deactivation of the tags just after the purchase.
As we see the benefit on the sales side could be great and could become even greater over time, leveraging data analytics for data-driven decisions, and machine learning technologies. Nonetheless, logistics processes can also increase their efficiency. An important collaboration on this site is with our 4PL, which by adopting the RFID technology could reduce the errors in the output process and have full control of the goods’ flow: today we already have a good accuracy but we do want to improve. The investment is therefore on both sides and requires close cooperation between us and our logistic provider. An equally strong collaboration must be ensured among all the actors in the supply chain in order to guarantee that the RFID tag is present and unique from the moment the goods comes out from the supplier factory to the house of the customer.
Once again digitalization as a concrete leverage for both efficiency and effectiveness by applying technology in banal and time consuming activities, and pushing sales through reliable inventory data: our journey in RFID is at the beginning and we’re eager to get the first key results. To be continue