RFID in theFashion Industry
Not just a cost-cutting solution

Introduction
Retailing has played a huge role in driving UHF RFID adoption overthe past few years, primarily because of its known benefits forenhancing the visibility of stock, driving down wastage costs andlosses and improving overall supply chain efficiency.
But, as more and more retailers attempt to roll-out
this solution throughout their operations, future
strategies are likely to go far beyond cost-cutting.
According to Professor Antonio Rizzi, founder ofthe RFID Lab, a primary research center for theapplications of RFID, innovators in the fashionindustry are leading the way in taking a proactive
approach to this burgeoning technology. In agroundbreaking study on the applications for RFID inretail, Rizzi and his team discovered that the fashionindustry showcased far more use-cases for RFID

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than any other sector, with 18 use-cases ranging
from shop-floor management to customerrelationship management, logistics, inventory,
supply chain management and brand protection.
“Retailers are now adopting RFID because they
have understood how to use this technology as avery powerful tool, not only to reduce costs (thatis, to streamline processes and reduce losses) but
also because they were able to use this technology
proactively, not just to solve a problem but tocreate an opportunity,” he said.

Rather than treating RFID tags as a pure costreduction tool, these retailers are coming tounderstand new ways of using RFID to forge newcustomer relationships, drive sales, enhance strategy
and develop cross-channel selling opportunities.
In this white paper, we will look at the components
of an RFID system; three use-cases for thetechnology in fashion retailing, and the five key
starting points for a retail-focussed RFID strategy.

How it works: Tags, printers/readers & middleware
Any comprehensive RFID system for retail involves
three core components: tags, readers and middleware.
Developments in the design and capabilities of each ofthese components mean there is even greater flexibility
for retailers to develop a system that suits their distinct
strategy and use-case, whether that relates to logistics,
inventory or shop-floor management.

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How it works: Tags
Tags
Unlike traditional barcodes, RFID tags containa unique 96-bit Serialized Global Trade Item
Number (SGTIN), combining a global trade
number with a serial. After being programmed
once, the tag is then read multiple times
throughout the supply chain and sales process.
Tags can be encrypted with both static data - datathat remains the same over time, like raw materials,
components and accessories - and dynamic data, whichis added in the course of the product’s journey.
When it comes to tagging methods, there are several
options for the fashion industry. The first, and simplest,
option, is to incorporate the tag into a price label: in thiscase, retailers simply print the tag on the price label
and encode the tag together with the label and affix toclothing. This is a favourite method in fashion and apparel4

because all items - no matter what colour, size, style ormodel - carry a price label. But it is far less effective thanother options for use-cases such as preventing inventoryshrinkage and tracking items after sale.
To get a greater handle on this, retailers are looking into
other options, such as incorporating RFID tags into carelabels, which are encoded upstream in the production
facility. This delivers a longer tracking period than theprice tag options - allowing for after-sale monitoring ofgarments - and is also a more effective anti-shrinkage
tool than the temporary price-label option. More recently,
permanent RFID tagging options have also become
available via the development of micro-tags which canbe sewn into garments for invisible, long-term tracking.
Tags can also be sewn into items as small wire inlays,
providing an airtight method of identification that is barely
perceptible and can be used to fight counterfeiting andthe spread of the grey market.

RFID tagging options for the fashion industry:• Incorporate the tag into a price label• Incorporating RFID tags into care labels• Permanent RFID tagging - sewn into garments
or intergrated during production

How it works: Printers and Readers
Printers and Readers
For firms who have decided to embark on an RFID-led stocktaking or tracking method, one of the first steps is to adopt a printing and encoding
method, and then decide how these tags will be read at each stage of the supply chain. Tags can be printed and encoded using an RFID printerwith an encoding add-on, while handheld readers are also able to encode tags, but not print them. A common method for encoding tags is‘Scan-Scan-Next’ process, in which the reader scans the RFID serial and the SKU and links the data together, then moves onto the next tag.
When it comes to reading RFID tags, there are two core options:Fixed Readers: Often utilized at transitional points in the supply chain
such as ports, checkout counters and packing stations, fixed readers
can drive up to 32 near- or far-field antennae; near-field offering anarrow/condensed read-field of up to 50cm, and far-field offering ahigher read-range of around 8-10 meters. With fixed readers, retailers
can create any kind of custom installation
at any point in the supply chain in which
the items move through a particularread station.

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Handheld Readers: Portable, pocket or handheld devices can be used
for massive inventory counts carried out by employees, for instance inthe store room of a retail premise. These generally function via bluetooth,pairing handheld RFID readers with Personal Digital Assistants (PDAs)
and allowing for the seamless, instant exchange of data.
Unlike barcode scanners, these readers can scan multiple tags at onceand do not requires a direct line of sight to the tag. While heavily stocked
warehouses and storerooms used to represent hours of employee labour,the same bulk of goods can now be processed in a matter of minutes,
with a far smaller margin of human error. Handheld readers can cover arange from a few mm up to 30cm, or up to 4-5m for larger stock takes.

How it works: Software
Software
RFID Middleware, otherwise known as an RFID
System Administrator (RSA) is fundamental inamassing the enormous amount of data collated ateach point in the supply chain and transforming it
into meaningful monitoring information.
The core duties of any RSA include managing the
RFID system, cleansing and filtering the data andpassing this data to to the retailer’s legacy system in
a comprehensible format.
Crucially, this is also the point at which the raw datacollated at various processing and tracking points
is translated into genuine insights that can prompt
informed action. All of the data is initially stored indata warehouses, and this needs to be processedby business intelligence tools that can interpret thisdata, transforming it into value-added informationthat will help key decision-makers take action to
improve their processes.

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Customer IT systems• ERP - Enterprise Resource Planning• SCE - Supply Chain Execution• MES - Manufacturing Execution System• WMS - Warehouse Management System• POS - Point of SaleRSA RFID system administrator middleware
RFID readers

Dashboard web
KPIs / alarms

Use-case 1: Stock visibility
One of the biggest challenges retailers face is being able to drill
down into the detail of why a particular item may not be selling in
the quantities anticipated: is it just not resonating with customers?
Are there design or pricing flaws?
It may well be that the product simply isn’t destined to
be a big hitter, or it may be that, somewhere in the supply
chain - anywhere from the first few miles to the last few
meters - something has gone wrong.
Without RFID, the last leg of the journey - from the storeroom to the shop front - has been next to impossible tokeep track of. End-of-season physical stock takes can give
shop-owners an understanding of how well items havebeen selling over the past few months, but they can’t give7

them the day-to-day oversight they need to make sure the shop
floor is continuously well stocked when it matters most.
Developments in RFID technology have given retailers a number of
options for improving stock visibility. Fundamentally, RFID has madeit easy to run inventories for both the storeroom and the shop front.
Retailers have the option of using ‘replenishment gates’ - fixed readers that track the movement of goods between the backroom andthe sales areas - or equipping staff with portable readers in order totrack items across the premises.

RFID HAS MADE IT EASY TO RUNINVENTORIES FOR BOTH THE
STOREROOM AND THE SHOP FRONTIn smaller stores, more and more retailers are now using
handheld readers that can carry out inventory counts at a
rate of 20,000 items-per-hour, counting the stock in boththe storage and the sales areas. This way, employees arealways armed with up-to-date, highly accurate data on
what needs to be replenished on the shop front, including
the sizes, models and colours that are selling most rapidly.
Employing RFID in this capacity has become a strategy
not just for preventing wastage but also for maximizing
sales, says Professor Rizzi: “The main issue at stake hereis that customers buy what they see, and so, if you forget
to replenish, customers in the store do not see that itemand don’t buy it, and you’re definitely missing a selling
opportunity.”
Extensive KPI campaigns have been carried out on thesales impact of employing RFID to improve front-ofhouse stock replenishment. These studies have shown aconsistent sales leap of around 5-10%, with some typesof product experiencing an even greater boost as a resultof this improved visibility. The latest generation of RFID-

8enabled solutions goes even deeper into the detail of aretailers’ sales figures, linking sales numbers to certain
high- and low-traffic areas in the shopfront. Armed withthis data, retailers are now able to closely monitor andreplenish certain areas of the shop that they would expect
to generate higher sales - e.g. entrances and windows - aswell as keeping an eye on whether sales figures for theseareas are meeting expectations.

...retailers are using handheld
readers with a productivity rate of

20,000items per hour

In this use-case, RFID offers a route to a more proactive
stock replenishment approach, and an even more strategic
understanding of store design and product placement.

Key points• RFID makes it easy to compile
separate inventories for the shop
front and the stockroom• Fixed RFID readers can be used in‘replenishment gates’ that track items
moving between the stockroom andthe shop front• For smaller premises, retailers areusing handheld readers with aproductivity rate of 20,000
items per hour
• Improved stock replenishment has
been shown to lead to an averagesales uplift of 5-10%

Use case 2: Inventory Accuracy
For almost a decade now, pioneering early adopters havebeen finding ways to enlist RFID tagging in their battle toimprove the accuracy of their stock takes.
For almost a decade now, pioneering early adopterssuch as Macys and Marks and Spencer have been finding
ways to enlist RFID tagging in their battle to improve theaccuracy of their stock takes. This proactive move wasspurred on by one realization from retailers: across theindustry, they had been suffering from incredibly poor rates
of inventory accuracy. In fact, average rates of accuracy
for pre-RFID stocktaking systems were languishing ataround 60%, representing huge discrepancies between
the stock listed on the legacy system and actual levels ofphysical stock.
Discrepancies between stock listed and physical stock
in store can be costly: for most retailers, the worst-casescenario occurs is one of overestimated stock levels,

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where the legacy system mistakenly lists several items more thanthere are. In this domino sequence, nobody orders the stock they thinkis still there, and numerous sales opportunities are lost over the courseof days, weeks or even months.
With traditional stock-management systems, a case of overestimatedstock may only be discovered when somebody carries out a physicalinventory at the end of the season. Conversely, the ease and speed of
RFID scanning enables stock checks to be carried out once or twicea week - or even daily - and this data can be used to update thelegacy system, which can in turn be used as a prompt to replenish andreorder. A recent literature review has shown that, with RFID, retailers
have seen inventory accuracy improved to 98-99%, which in turnleads to a notable increase in sales by reducing those avoidable ‘outof-stock’ moments.

RFID as a springboard forcross-channel selling
An ever-greater number of retailers are now opting
to use this foundation as the springboard for a whole newomni-channel sales strategy. Increasingly, customers are
expecting a greater symbiosis and a fluidity of experience
across both retail and detail channels; purchasing methods
that merge the two - like the ever-popular ‘Click andCollect’ - are becoming a cornerstone of modern-day
retail.
As the high-street stores continue to battle rising
overheads, it’s perhaps understandable that brick-andmortar shop-owners are now trying to exploit their
physical premises and online channels to propose whole
new ways of shopping. Different sales channels canbe combined in a huge variety of ways: customers canresearch online, buy in store; buy online, ship to store; buy
in store, ship from store; buy online, pick up in store.

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As RFID experts are keen to stress, the technology alone is
not enough to build an omni-channel strategy - but it does
constitute a fundamental part of it. For the first time, RFID
allows retailers to see their shops like warehouses that fit

to build a reliable cross-channel offer. “Why is RFID
important? Because you cannot base an omni-channel
strategy on a ground of poor inventory accuracy,” hesays. “Because the first time you sell something you
don’t have, you lose the trust of your customer.”

For the first time, RFID allows
retailers to see their shops like
warehouses that fit seamlessly
into a wider distribution chain

Before RFID tagging started to become more widelyused, retailers had to give themselves leverage ofaround 8-10 items in order to list something online andcompensate for human error. Now, the near-perfect
track record of these systems has
given retailers the confidence tolist all items with an inventoryof one or more on their online
platforms and marketplaces.

seamlessly into a wider distribution chain. Pooling stockand resources across stores in this way can about bringabout huge reductions in holding costs while also reducing
the problem of missing sizes and creating a more efficient
process for correcting stock level issues, without returning
whole models to a central distribution centre.
According to Rizzi, the difference that RFID makes isoffering a firm foundation of inventory accuracy on which

Key points• Inventory accuracy is a cornerstone of RFID retailusage, delivering accuracy rates of around 98-99%• This has led the foundation for lucrative crosschannel selling, with retailers establishing schemes
like Click and Collect• By treating retail premises like warehouses andpooling stock across stores, retailers can radicallyreduce holding costs and boost the efficiency of
their processes

11Use case 3: Anti-counterfeiting and Grey Market
Counterfeiting is a growing issue for the fashion industry, with increased
global trade providing ever greater opportunities for counterfeiters to
infiltrate the supply chain and create cut-price versions of branded goods.
In 2016 alone, European Union border officials seized more than 41 million
counterfeit and fake goods, and it’s been estimated that counterfeit goods currently
account for 2.5% of trade worldwide and 5% of EU trade.
Increasing levels of international trade have also spurred on a thriving grey market
for unauthorized dealers who sell goods on to customers in grey markets. Whenit comes to luxury fashion labels and products like designer watches, this trend isparticularly pernicious: well-known branded products can often end up listed on
unauthorized dealerships, who drastically undercut original pricing and undermine
brand value and strategy.

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Within this complicated global trading environment, grey-market distributors
have typically been able to operate under a protective cloak of obscurity. With
RFID, however, these operations can be uncovered at their very source. Uniquely
for RFID, the SGTIN associated with a particular tag can be linked to an intended
customer, and retailers have an unprecedented ability to track goods from source todestination. If the items then emerge in an unauthorized market, the original seller
has crucial information about the dealer and shipment of the item.
It is perhaps for this reason that global fashion retailers have started to employ RFID
as part of major anti-grey market campaigns: it constitutes a particularly powerfultracking tool that has so far been unanticipated by these unofficial dealers.

According to Rizzi, there is also a clear financial incentive for tackling theseunlicensed and unregulated operations. “Sometimes retailers neglect the amountof lost revenues at stake with the grey market or the black market, but in visibility
studies we’ve carried out with some companies, we’ve seen that those values canbe in the range of millions of euros per year,” he says.
In the fight against counterfeiting, RFID contains another unique feature: the TID, or‘Tag Identifier’, which is encoded into the tag chip and represents a forceful weapon
against would-be counterfeiters. “The TID cannot be counterfeited – and therefore
once it is tracked to the EPC and is tracked to the product, it cannot be modified,”
explains Rizzi. “Due to this, it can be used to understand whether a product isgenuine or not.”13

Key points• Grey market and counterfeit goods are on the rise, andrepresent a serious threat to brand value and trust• If RFID-tagged products end up in unintended markets,
unauthorized dealers can be identified and tracked down
• RFID tags feature a Tag Identifier that is impossible tocounterfeit, making it a powerful tool in the fight against
fake goods

Five tips for implementing RFID
For retailers considering overhauling their current supply
chain with an RFID tagging system, Professor Rizzi has
5 primary tips for getting started:

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Don’t doubt the efficacy of the technology: RFID may be around half acentury old, but in recent years, a huge amount of R&D effort has gone
into improving the technology: tag performance is increasing, and readers
are reading at a faster rate and with higher accuracy than ever. Aside fromvery new and innovative use cases, it’s not worth spending time testing thetechnology - there are more efficient and cost effective ways to start that willprobably maximise the benefits your business gets from RFID.

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Identify the ‘why’ of your RFID strategy: Rather than starting withthe tech or assuming that RFID will be a one-size-fits-all solution,
Rizzi recommends starting instead from an assessment of the issues andopportunities at stake. What issues do you currently have? What data isneeded to solve these issues? “It’s a kind of doctor approach,” he advises.
“When you go to the doctor, you don’t start from the prescription, youstart from the symptoms; that is, your problem or opportunities – then you
have the diagnosis; that is, what data is needed – and finally you have theprescription; that is, what the system is.”14

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Conduct an analysis of the actual processes: Once you know the issues that you needto solve, design the ‘as-is’ scenario: the actual processes at work. “Design the to-be RFID
scenario: what technology, what readers, what tags, what information, what integration withthe legacy systems you need, but also the entire new way of doing things,” argues Rizzi. “And thisfeasibility study should lead to a twofold objective: on the one hand, to provide a roadmap forthe whole RFID deployment, and on the other hand, to calculate the ROI and other economics toassess the value of the deployment.”

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Follow the 80-20 rule: Rather than taking an ‘all-or-nothing’ approach to RFID technology
adoption, Rizzi says it’s important to recognise that sometimes 20 percent of the changes canreap 80 percent of the rewards. With the specific issues in mind - whether counterfeiting, stock
accuracy or shop management - a tailored solutions can often be found.

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Be part of the Early Majority: When it comes to the timing of your RFID roll-out, the time isnow. Apparel and footwear are driving the adoption of RFID, with the amount of units being
produced expected to more than double over the next few years in this sector alone. Over the
past decade and a half, the trajectory in RFID has moved from ‘innovators’ - the first 2.5% of firms
experimenting with the tech in the early 2000s, including Walmart and Metro - to the 12.5% early
adopters, including Macys, Decathlon and M&S, who were employing RFID between 2008 and2015. Now the ‘early majority’, who waited to see provable benefits before investing, are starting
to adopt the strategy - while the next decade will likely see mainstream adoption.

Conclusion
With its unprecedented stock-taking and tracking
capabilities, RFID tagging represents a unique answer
to many of the salient issues faced by fashion retailers
today. In addition, in an era of increasing global trade, thepotential of RFID to act as a weapon in the battle against
the flow of counterfeit and grey-market goods offers
another huge incentive for retailers to consider RFID as abrand-protection measure.
Having proven its credentials as an effective cost-cutting
and anti-fraud tool for retailers, the future of RFID adoption
looks to be an increasingly creative and innovative one.
RFID’s accurate stock-taking capabilities have become thefoundation for multiple successful omni-channel strategies,
as well as being utilized to boost stock visibility and sales
in-store.
Unsurprisingly, then, adoption and production rates are
currently showing a steep upward curve: by 2020, the15Internet of Things will consist of 50 billion objects, withmore than half of these containing passive RFID tags andaround 25 billion tags produced in the year 2021 alone.
According to experts, the start of the next decade is likely
to see widespread adoption of RFID technology in retail- with the late adopters and ‘laggards’ being the last to
catch on.
At this transitional point in RFID’s development, there areproven benefits for to adopting RFID: with simple, targetedchanges, retailers can see immediate boosts to sales, aswell as significant efficiency savings. But to maximize
benefits, the message from the experts is clear: “The time
is now.”