Jones Apparel Group in Item-Level RFID Test

RFID continues to be a terrific opportunity for certain items, suppliers, and retailers but is not yet ready for massive rollout on every SKU. This test will verify that you can track and manage inventory more effectively on high retail, average/low turn clothing.

The technology makes the most sense for high retail/high turn items like razor blades, laundry detergents, cosmetics, etc, where the cost of the tag and set up is easily absorbed into the item P&L and is offset by reduced inventories and higher turns.

Now, how do you translate that item P&L into very high turn items like a 50 cent can of Viennas or a can of Pringles? RFID is still cost prohibitive for many SKUs, but clearly makes great sense for the right items which center on that item's P&L.

Dan Nelson, CEO, Leadership Resources

Hope springs eternal. At this point it isn't a question of cost, it's a question of return.

Ryan Mathews, Founder, ceo, Black Monk Consulting

RFID will continue to become a commonplace technology (think: UPC code of the future) as big users make it more cost-effective. Walmart continues to push in this direction, which makes it more realistic for other users. Certainly a SKU-intensive business like shoes could benefit from the sort of advancement in inventory management that RFID represents.

Richard Seesel, Principal, Retailing In Focus LLC

Apparel retailers have tracked style and size, but not color. This always results in an inventory imbalance. RFID at the pallet and case level helps the supply chain, but little for the store. The fact is the majority of inventory is and should be at retail, so having accurate visibility is the future. The problem continues to be return on investment. ROI can only be achieved on higher value and control merchandise. The cost is still too high for every item.

The other problem is that RFID must be an all or nothing application. To only include some items and exclude others results in increased costs without the payback.

There are still some real world problems that have yet to be solved. At this time, RFID does represent a potential future, unless something else is developed.

W. Frank Dell II, CMC, President, Dellmart & Company

RFID has potential to enable better merchandising visibility, but only where it is wrapped into store-level compliance disciplines. These may be enabled by broader technology that incorporates the RFID signal into the total picture of shelf conditions.

In other words, I continue to maintain that RFID is a solution element, not a solution. When it is deployed as a signaling mechanism within system of superior store level practices, it has potential to give retailers an edge by triggering faster merchandising responses. If not backed up by an In-Store Implementation methodology, RFID is merely a tool that automates measurement of last month's mistakes.

James Tenser, Principal, VSN Strategies

Unless the tests are done, there is no way to tell if the benefits exist. If management sees potential for the information to be useful, a test is certainly worthwhile. Without pilot tests you can't know what might be possible.

Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

The MediaCart system is built on passive RFID using shelf labels. The discussion here is rightly focusing on inventory management, but there is a good deal more that can be done with the data. Think how long it took from when scanners were introduced until dunnhumby assisted Tesco in showing how to use this (OK, and they weren't the only ones involved.) The point is, there are many retailers for whom, to this day, the scanner is largely about ringing up sales and tracking the gross numbers, whether for inventory or otherwise.

I hope that it won't take 20-30 years after the technology is adopted for management of inventory, before the industry makes serious use of what the technology can teach about the science of retailing. We have been using active RFID for "item level" tracking (but not inventory control) for 8 years now, and hope our new book, soon to be published by Wharton School Publishers, will wake a few people up as to what they don't know, but should.

Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Adjunct Senior Fellow, Ehrenberg-Bass Institute

Clearly it will be easier for retailers with larger items to start the RFID age rolling (think Costco vs. Claire's), but in the near future, obviously, RFID will be commonplace. The benefits so incredibly outweigh the challenges that it's a bit of a slap in the retail face that the conversion hasn't happened sooner. Short sightedness being the usual demon.

It seems that being a fast second is the nature of retail today, which makes innovation the way to differentiate and win.

Lee Peterson, EVP Creative Services, WD Partners

One thing that reduces both companies' cost: they're the producers as well as the retailers. However, given the low price points of American Apparel and the moderate price points of Jones, it's not easy to see why RFID would yield a greater return than bar code scanning. The real test: will RFID be implemented 100% chainwide at either company? When that happens (not when it's heralded in a press release about the future), it might be a decent sign that the payback is worthwhile.

Mark Lilien, Consultant, Retail Technology Group

I get the impression that the apparel industry is not using barcode beyond the application of the UPC symbol for price look-up.

For instance, two pairs of shoes of different size and color, but same style and price will have the same bar code.

Can anyone confirm this, or provide further insight?

Chris Kapsambelis, Consultant, Barcode Data Systems Corp.