The tech shaking up fashion’s inventory load

Radio frequency identification (RFID) technology is in the fashion spotlight as omnichannel and resale present new uses post-pandemic.

By guest author Maghan Mcdowell from Vogue Business

“The pandemic shed a light to all the brand owners, retailers and manufacturers on the vulnerabilities of their supply chain. They don’t have enough data to manage it, and the consumer demand changed as well,” says Uwe Hennig, the director of global RFID market development for apparel and food at Avery Dennison, which is the largest provider of RFID tags to the apparel industry.

RFID technology is the rare exception in that fashion and apparel is driving adoption before other industries, Hennig adds. Avery Dennison’s “smart label” business rose 9 per cent in 2020, with most of that growth in apparel. The global RFID market is expected to grow from about USD 10.7 billion now to USD 17.4 billion by 2026. Li estimates that about 70 per cent of retailers are interested in implementing RFID within the next year. “Smartphones have enabled a digitally connected customer, and now RFIDs are making digitally connected products,” says Joel Goodson, content marketer at Detego, whose RFID software platform is used by Levi’s, Adidas and Reiss.

Full visibility

Already adopted by leading e-commerce players like Yoox Net-a-Porter, whose seven-building logistics hub in Bologna uses RFID tags on its e-commerce orders to check the contents in packages before being shipped to customers, RFIDs are now being used in-store to give brands a more accurate picture of what’s selling and what needs replenishment.

RFID tags also make store fulfilment, often a more profitable option, easier to roll out. Ganni is using RFIDs to fulfil online orders from stores, aimed at eliminating the need for separate stock for web order fulfillment and store orders. This could end overstocking and overproduction, says Karolin Stjerna, Ganni’s supply chain director. In two weeks after implementation, inventory accuracy in one of its stores jumped from 93.4 % to 99.5 %.

With omnichannel services the new status quo for the fashion industry, RFID’s ability to improve stock accuracy is crucial, says Goodson. “You can’t offer omnichannel without stock accuracy and real-time visibility. ‘Stock accuracy’ sounds unglamorous but it doesn’t do it justice for how it can transform retail.”

Mango recently added RFIDs to its new Barcelona flagship, which it refers to as giving each item “a license plate” that allows the brand to know which garments clients take to the changing room and ultimately take home: “This technology … is a way of having very relevant information that we previously only had through our online channel,” the brand said in a statement.

All captions courtesy by Vogue Business

Fixed RFID readers in store, which track the product (rather than reading tags with handheld devices that move through the shop floor and stockroom) can also map which areas of the store lead to the most sales.

AZ Factory products include NFC tags that, when scanned, open a special “Alber & Amigos” website where customers can see selfies from other customers, pieces they have bought and other content. Scotch & Soda is also linking its RFIDs with QR codes that can be used for brand storytelling.

Beyond the sale

RFIDs have more adoption around the beginning of product life cycles than after they are sold, but that is changing. Permanent, washable tags can be used to prevent fraud, enable authentication and aid in returns, rental and resale.

For example, point of sale systems know the exact item that is sold, so the system can identify if someone tries to return something that was never sold, says Dean Frew, CTO and SVP of RFID solutions at SML Group, which works with Nike, PVH and L Brands. Additionally, dual-frequency RFID inlay can replace traditional electronic article surveillance systems that trigger in-store alarms that monitor theft, adds SML Group CEO Ignatius K.C. Lau. Rental platform Caastle, meanwhile, uses washable RFIDs to track items as they flow through its fulfilment centres.

In February, resale platform Vestiaire Collective partnered with Alexander McQueen on a resale programme that gives pieces an NFC tag that enables buyers to access item information. (Smartphones can “read” NFC tags without external hardware, but most RFIDs used in stores require an additional reader.) Earlier this month, Ebay introduced a similar programme that authenticates handbags from brands including Saint Laurent, Gucci, Celine and Balenciaga, and gives each an NFC hangtag, building on its sneaker NFC programme. Nike and Adidas already use near-field communication chips in many products, and as they establish buyback and recycle programs, the same IDs can authenticate products and carry provenance information.

NFCs will improve and “future-proof” both buying and selling of sneakers and handbags, says Ebay’s VP of Fashion, Charis Márquez. NFCs also allow Ebay to share information about a specific shoe style, plus content such as the popularity of the shoe and similar styles. “Our shoppers voraciously consume information about sneakers, and we want to be a resource for that,” Márquez says. At the same time, understanding when, where and how consumers interact with the NFC will allow a “deeper understanding of the wants and needs of Ebay’s enthusiast communities,” while helping brands forecast based on secondary market trends.

As more brands invest in RFIDs when items are manufactured, multi-brand retailers will also be able to take advantage of the benefits without the investment, Nedap’s Li says. (While there are various service providers, all RFID scanners can read all RFID tags, and retailers are already accustomed to multiple label providers, she says.) Already, a brand can use its RFID-tagged products to communicate with retail associates and monitor inventory activity. It could, for example, provide information to associates about which items to merchandise on the store floor, and which are selling best.

“Moving forward, I see a huge focus on different types of experiences you can provide with RFID,” Li says. “More and more retailers are, this year especially, in a very interesting exploratory phase”.