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Business Accent
The post-2005 role of RFID in the Indian apparel retail sector
RFID can change the mechanisms of the retail scenario in
the Indian apparel industry.
As FDI in the retail sector is being allowed, several apparel majors are expected
to join the domestic apparel retail battle. This article evaluates the role
of Radio Frequency Identification (RFID) in the Indian apparel retail sector,
and how far it can increase the technology index of the sector. A comprehensive
analysis shows the various areas and applications of RFID in apparel retail,
and how it can increase inventory management and help in cost saving. RFID is
a technology that can change the mechanisms of the entire retail scenario in
the Indian apparel industry. It is a new multi-dimensional implication model
that can enable companies to create niches and develop core competence.
RFID is an identification or tagging method that functions similar to a barcode
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.
RFID can find quite a few applications in the apparel retail industry.
Re-stocking alerts and replenishment
Shelves are monitored to ensure that they remain stocked
at appropriate levels. When they fall below that level, an alert is sent to
the stockroom or office to bring out or order more merchandise. For stores with
stockrooms, RFID monitoring alerts employees when stock levels reach the threshold.
Depending on how the system is configured, re-orders may be done automatically
for items that the store plans to continue selling. For example, if many black
trousers of waist 32-size are being sold and are getting out of shelf, RFID
can send an alarm to order more such trousers from the storeroom.
Returns are quickly added back to inventory
When any apparel product is returned or exchanged, its RFID tag could be read
and automatically added to the inventory database. Employees who do re-stocking
could read the RFID for returned items; they could be given information about
where to place them (that is, the appropriate shelf if the item is not defective,
or a particular area in shipping for returning to the vendor if the item is
defective). An application could automatically compare the RFID code of the
returned item against recall notifications.
Merchandise levelling across stores
By monitoring inventories at different stores within a retail chain, the management
could make intelligent decisions about how to meet customer demand and reduce
discounting by shipping items between stores. For example, Delhi will have a
longer season for selling sweaters than Bangalore. If, in February, Bangalore
stores are oversupplied for what remains of their season, while sweaters are
still selling well in Delhi, they may decide that enough discounting would be
eliminated to justify the cost of shipping items from Bangalore to Delhi. RFID
could be used to track inventories and indicate when the sweaters actually reached
the Delhi store so that Delhi would not be billed for them until it received
the merchandise.
Reduced need to check merchandise carried by customers
into a store
Some stores require customers to leave merchandise that they are carrying at
a desk or provide evidence of purchase. However, if a store has RFID readers
or writers and RFID-tagged merchandise, shoppers could avoid this step. Instead,
at checkout, the readers would charge customers only for items with tags that
indicate that they were not already paid for.
Custom video presentation for merchandise brought into
fitting room
If fitting rooms are equipped with RFID readers to identify the merchandise
brought in, shoppers could see a video in the fitting room describing the features
of that apparel and could see a person modelling the garment and suggesting
accessories. A sophisticated system could even scan the shopper or use pictures
of the shopper stored in a profile associated with the shopper’s personal
RFID. It can then display the shopper in the RFID-tagged apparel with the recommended
accessories.
Tracking employees to improve labour effectiveness and
efficiency
Knowing where an employee is at a particular time would allow the management
to dispatch the closest-qualified employee to a location requiring assistance.
If an RFID reader detects an RFID-tagged employee approaching a security door,
the door could be designed to open automatically. This would allow employees
carrying packages or carts to move more efficiently. Additionally, if store
management could verify through an automated system that an employee was at
the appropriate station at the start of the shift or end of a break, some aspects
of labour management could be automated, requiring less effort by employees
and the management. This type of monitoring would also allow the management
to know, for instance, if an employee spends excessive time in the break room
or if he is not getting enough break time. Reports could be generated automatically
to flag exceptions for management attention.
Customer-specific shopping reminders and promotions
With RFID on loyalty cards to identify the customer, and
a customer shopping-history database, items could be priced differently depending
on the characteristics of the shopper (e.g. special promotions for first-time
shoppers and rewards for frequent shoppers). Different promotions could be offered
to different customers via their personal digital assistants or cell phone displays,
at kiosks, and by employees receiving prompts on their point-of-sale terminals.
Additionally, if customers have submitted their profiles to the store, they
could be reminded of upcoming events such as birthdays, and have purchases suggested
to them. These can be added on to the loyalty cards which already exist at places
like Shopper’s Stop, Wills Lifestyle, etc, and can be centralised to all
the stores in different cities so that customers, for example, get a similar
welcome whether they are in Bangalore or Mumbai or Delhi.
Future directions
The two major issues plaguing the RFID industry are price and standardisation.
In an attempt to reduce tag costs from 50 cents to 5 cents, Alien Technology
has developed a low-cost manufacturing technique in which chips are suspended
in liquid, followed by passing the liquid over chip mounts. New Zealand-based
Sandtracker claims to have produced a low-silicon chip that can be manufactured
for about 6 cents. Sandtracker says that its technology uses less silicon than
conventional RFID chips do, and that its bare-bones design (it contains only
a number identifying the goods tagged) allows it to be manufactured for less
than 10 New Zealand cents. The company adds that it has developed its chips
to work in different environments, particularly those that are troublesome for
conventional RFID chips and readers.
However, the unique design of Sandtracker’s RFID technology means that
it doesn’t conform to EPC global standards. This could be a major obstacle
for the company since its tags can’t be used in supply chain applications
where goods have to be moved to different locations. As things stand right now,
Sandtracker tags are restricted to single business-location applications such
as inventory. Standardisation is still a long way off, though low-frequency
RFID has been standardised at 13.56 MHz.
At this stage, privacy may not be a major concern, but as RFID moves from the
warehouse to store shelves, kill switches (whereby a tag’s data can be
switched off permanently) are growing in demand.
The advantages of speed and ease of use should lead to a
widespread adoption in the near future if costs can be reduced and privacy issues
resolved.
The author is a telecom engineer who is currently pursuing
his PG in Fashion Technology at NIFT, New Delhi.
E-mail: ankushwadhwa@yahoo.com
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