RFID Success Strategies for Apparel Retailers

Proving the authenticity of products has been a challenge to building consumer confidence for any brand. The rise of counterfeiting and illegal cloning have been a threat to retailers worldwide!

According to a new report by OHIM, counterfeits cause European luxury brands to lose out on 9.7% of their total sales every year, or a staggering €26.3 billion ($28.7 billion). Knock-offs of these brands are easily available in the market. Product manufacturers pay dearly for counterfeiting including brand erosion, loss of market share, intellectual property value dilution, customer support for non-authentic products, and bad will.

Luxury houses are prone to having their items stolen and sold in the black market, as they are synonymous with status. Louis Vuitton bags, Gucci shoes, Burberry coats, you name it—have been the targets of theft! The prospects of high value merchandise being openly accessible to customers increases the chances of theft and fraud.

Just another scenario — You are approaching the Yearly Sales Season. Your fast selling items appear to be in stock, but not in all the sizes that sell out the fastest. Even when an item is available in the retail house, it may not be on the correct shelf. Inaccurate location tracking adds to the chaos and creates a ‘false out-of-stock situation’, leading to loss of sales on items with the highest sales throughput, with an added likelihood of the stock never being cleared.

Keeping track of high-end products is key to accurate inventory. Knowing what arrives in your distribution centre or store and then knowing what leaves should, in theory, give you an accurate inventory. However, life is not that simple! Boxes and crates are often misplaced & shopper behaviour leads to items turning up all over the store, making real-time location tracking a tedious task. Unlike a regular Walmart or Target store where each product has multiple sizes and variations, Luxury products are limited edition and often custom made; each misplaced product could potentially equate to loss in sale, customers and opportunities.

As per a 2004 report from Harvard Business School, 8% of retail items are out of stock at any given time, costing the top 100 retailers approximately $69 billion a year. The inability to find items results in up to 65% erroneous inventory counting and out-of-stock situations.

Ensuring precise inventory and stock control is of prime focus for commodities such as Fashion Apparel, considering the number of times a product moves from shelves to trial rooms, and the overhead of exchanges. Technology brings in positive transitions to the business, ensuring accuracy and streamlining processes despite changes at the back end. In today’s digital world, ‘brick and mortar’ stores are transforming to ‘brick and click’ stores at the speed of light!



RFID fits into the new Retail IT perspective as a novel business value added framework, occupying a significant position in the retail IT landscape over the past decade. Until now, beacon technology has been primarily used for in-store digital marketing efforts. RFID solutions can offer much more detailed location data for certain applications than proximity-based beacons, eventually helping in assessing the effectiveness of a store's layout, displays and end-caps on a real-time basis.

Many people understand RFID as a next-generation barcode with technology to automate inventory control. Few people understand that this technology can also protect against counterfeiting, and even fewer have the knowledge of how or what to consider when shopping for the right anti-counterfeit solution.

Item level tagging is at the core of RFID’s value addition to the retail industry. Recent reduction in size and costs of RFID tags and new methods of printing and encoding have increased inventory accuracy for retailers, generating value beyond the supply chain, throughout the entire value chain. Messages notifying a store associate of low stocks in particular shelves can proactively encourage replenishment via back-room stock, thus optimizing their sales. The potential value realized is targeted at 100% inventory accuracy, significant reduction in person hours for inventory management and replenishment, decrease in shrinkage and reduction in wait times at checkouts leading to increased customer satisfaction and sales. All these result in high return on investment in RFID.

UST Global has been a long-time observer of the RFID industry. We have been witnessing with déjà vu, RFID implementations building steadily to a "tipping point" in 2017. We project that by 2020, Retailers who implement RFID techniques will outpace the competition by 4x times the laggards. This paper explores UST Global’s recommended strategies which can be adopted by Apparel Retailers to succeed in Omni-Channel retailing.



All retailers have a plethora of responsibilities to provide the customer with authentic products in today’s global trading community—it involves more than just spotting a knock-off designer handbag on sale at a flea market. Companies invest millions of dollars to design, manufacture, test, market and sell items to create an emotional connection with their consumers. With technology driving an “always on-always open” digital marketplace, anything can be faked. So how can the Retail industry stakeholders ensure that the luxury handbag sitting on the store’s shelf is absolutely Authentic? At the heart of any good anti-counterfeit plan is inventory visibility, with technology being its critical enabler.

Apparel retailers have invested billions to implement Omni-Channel strategies, but few have succeeded. Process inefficiencies in supply chain and inventory management result in failure of these strategies. Profitability and margins are under the scanner more than ever before. Getting things done in less time will ultimately reduce costs and strengthen the bottom line.

Most retailers spend considerable amounts of time in one single aspect – obtaining adequate supply chain visibility – a precise view of the inventory to put the right amounts of items in the store, order right quantities to limit out-of-stock conditions, and to ensure that warehouses and store back rooms have the right quantities in stock. Currently, inventory counting is a time-consuming, manual and error-prone process. Out of stock situations, along with a converse overstock situation where supply of a given product exceeds its demand, collectively contributes to inventory distortion, costing retailers of the world $1.1 trillion annually.

Into this space comes the promise of RFID technology. The sweet spot of RFID is the effortless tracking of every product at every moment in the journey from manufacturing to the final point of sale. An unprecedented view of the inventory and movement of assets and products is critical in shaping strategies for explosive business growth.


RFID has high ROI potential in the following categories:

Some success stories in the apparel industry have had RFID playing a key role. The yoga and sports apparel retailer Lululemon increased its ecommerce sales by tracking the location of millions of goods as they move about in the stores. RFID brought inventory accuracy in the company’s internal systems to 98%. The ability to know with precision the store in which each product was available improved their Omni-Channel solution to meet customer needs. Apart from sales, RFID technology also reduced labour hours. Stock refilling and inventory counting time were reduced by more than 50%. The number of stock-outs was reduced to less than 50 items at any given point in time, with a few stores even reaching a goal of zero out of stocks throughout the day.

In January 2017, Thomas Pink deployed a digital solution that would allow the luxury apparel retailer to track the movement of both people and products around its New York City store with the help of RFID and multi-sensors. The solution designed to improve store operations has been a blessing for sales associates. If a customer picks up a men's shirt, carries it elsewhere in the store and then abandons it for another product, the next shopper looking for the shirt may not be able to find it, and the sales associate will end up searching for the desired item. With the new digital solution, a Thomas Pink sales associate with that item's exact location can immediately locate the missing item. Additionally, if the garment sold is the last one of its style and size in-store, the solution can immediately alert an associate to place a replenishment order, rather than waiting until the end of the day for a stock check.

Beginning with its pre-fall 2014 collection, Salvatore Ferragamo began embedding RFID chips into the soles of its women’s shoes to enable verifying their authenticity. Later, they used RFID chips in other categories such as women's bags, men's shoes and small leather goods. In 2015, the brand assisted authorities in seizing and destroying $17 million dollars of knockoffs, mostly counterfeit belts made in China, aiming to reduce the sale of counterfeits and preserve the authenticity of goods in case of exchanges.


Improvement in key Retail Metrics/KPIs Before and After RFID adoption

Zara, the innovative, fast-growing retailer has implemented RFID in more than 2000 stores. The time taken for physical inventory has come down to less than 15% of the time when it used to be manual.

Coccinelle, a high-end children’s clothing retailer optimized its inventory accuracy using RFID, resulting in more than 60% decrease in online order cancellations. Giving customers a precise view of what items were currently available at which store improved the BOPIS (Buy Online Pick up In-Store) sales, and prevented them from ordering sold-out products. Implementing RFID right from the warehouse gave the retailer a real-time view of the inventory, to display accurate information across all channels.

American Apparel used RFID to create exception reports to identify internal theft by store associates. Sifting through discrepancies in RFID and POS data, the retailer managed to decrease overall shrink by 30%, equating to more than $5 million in savings.

Figure 3 depicts the key retail KPIs considered in recent times. Increased inventory accuracy and customer satisfaction, along with reduction in store out of stocks and shrinkage are prominent outcomes in recent surveys.


RFID at a Glance

RFID belongs to a group of technologies referred to as Automatic Identification and Data Capture (AIDC). At a simple level, RFID systems consist of three components: an RFID tag or smart label, an RFID reader, and an antenna. RFID tags contain an integrated circuit and an antenna, which are used to transmit data to the RFID reader (called an interrogator).

The RFID device is similar to the barcode or the magnetic strip at the back of a credit card, which provides a unique identifier. Just as a barcode, the RFID device must be scanned to retrieve the identifying information. Providentially, RFID works better than barcodes, as the RFID device need not be placed directly under the scanner. The RFID reader converts the radio waves to a more usable form of data. The data is then transferred through a communications interface to a host computer system and stored in a database, and can be analysed at a later point in time.

As an inventory management solution, RFID technology represents a quantum leap forward from the conventional UPC or barcode.


How RFID Works

RFID readers transmit up to 1 watt of power into the space where an RFID tag might be. The tag, akin to an electronic barcode, relies on power from the reader to echo back its ID. In a room full of products, the RFIDs can be read in seconds. The various types of RFID devices are:

  • Passive Reader Active Tag (PRAT)
  • Active Reader Passive Tag (ARPT)
  • Active Reader Active Tag (ARAT)


RFID over Barcodes:

Multiple types of RFID tags are used in the apparel industry. Common examples are Hang tags, Self-adhesives, and Printed Fabric Labels (PFL).

RFID can eventually replace barcodes in applications where bulk counting is routinely performed. An RFID tag can hold much more data about an item than a barcode. Additionally, unlike barcode labels, RFID tags are not susceptible to damage such as ripping and smearing.

UST Global cognizes the value benefits of RFID over conventional barcode from the following key aspects:


Integrating RFID into the Entire Supply Chain: Maximum Gain for Omni-Channel Success

To reveal the true potential of RFID and generate maximum benefit for the retailer, RFID technology has to be built into the entire supply chain. RFID needs to be adopted by the manufacturer during the production and shipping out of the garment. The logistics team needs to adopt and use RFID for shipping and delivering goods at warehouses and stores, to optimize labor-intensive activities in the warehouse. In the store, associates need to use RFID to ensure item stocks are at optimum levels. Exception reports generated from POS and RFID data can be used by the retailer to reduce shrink.


Loss Prevention, Location Tracking & Counterfeiting

  • Traditional surveillance systems inform retailers every time they are breached, but not what exactly left the store. RFID systems provide protection from theft, as items will be tracked when leaving the store and exact product information can be sent directly to security staff. In addition to improving loss prevention, Exit/employee door RFID reads enable tracking of store merchandise at the final point of exit, validating sales and preventing in-house fraud.
  • Smart use of RFID technology enables retailers to track the precise movement of an item inside a store. Using a network of mounted sensors integrated with video data enables product tracking and brings down customer theft drastically.
  • RFID will provide retailers the ability to have a unique ID per item. Item-level RFID provides significant protection against counterfeit items in the case of product returns, exchanges and customer complaints. This will contribute majorly towards loss prevention, as it can be confirmed whether a sold item being returned is the same, and not a fake one instead. Using sewn-in printed fabric labels (PFL) can deter theft, and help identify fraud during merchandise return.

  • Other intangible benefits include reduction in loss of sales through increased visibility and better management of stock through accurate, real-time location of products moving in the store. Real-time RFID inventory systems support the restocking and reordering processes. The system proactively highlights when a shelf or rail is running low of a certain item or size, prompting the staff to restock from the back room or gather misplaced items from around the store. During recent Black Friday sales, major retailers like Target and J.C. Penney provided in-store mapping technology, allowing shoppers to use mapping tools within the retailers’ apps to find the best deals within their respective stores.


Inventory Management and Product Tracking

The complexity in managing massive inventories at every link in the supply chain and providing actionable intelligence of products and shipping logistics is enormous. A collaborative effort from all businesses involved is required to successfully improve processes, meet customer demands, reduce costs, and increase profitability.

UST Global understands its partners’ goals, business and customer requirements to foster a successful supply chain partnership to implement RFID at the ground level.

  • RFID tags will be printed and embedded into the apparel by the manufacturer. Work in progress can be tracked, and automated shipping information will be updated to the central systems. Once the items are shipped to warehouses, automated systems can trigger advance shipping notices by scanning the packages put out to the trucks.
  • RFID provides the intelligence necessary to maintain a small safety stock which equates to reductions in holding and labour costs, and increased efficiency in the distribution centre (backrooms) and in-store. Bulk RFID scanning can be used to verify items while picking and packing, thus enabling fast scanning for inventory counts to schedule shipping and delivery. As compared to manual methods, RFID inventory counts are at least 60% faster.
  • Automated store floor replenishment can be enabled using RFID tags, and integrating POS to the backend inventory system. Based on items sold at the POS, businesses can have accurate, near-real-time intelligence into inventory records, and locate items in a facility at all times.
  • Adopting item-level RFID can prevent inventory distortion and loss of sales, increase inventory accuracy up to 99% and maintain it at 95-99%. This level of accuracy enables retailers to increase on-floor availability by up to 30% and successfully implement Omni-Channel strategies.
  • With RFID, inventory counting can be done faster, more frequently and with greater accuracy, leading to significant reductions in out-of-stocks and improved revenue and gross margin. Figure 10, explains the inventory accuracy statistics for Manual v/s Automated counting.

  • Inventory accuracy positively impacts all aspects of inventory management, as depicted in figure 11:

  • Exception reports generated by analysing and comparing POS data with RFID data will help bring down associate theft by identifying specific patterns. This reduces sweet hearting by store associates.


Improving Customer Experience

  • RFID tags can help retailers track the customer’s shopping behaviour to identify why an item is not selling well. For example, if RFID data indicates that the item is taken to the fitting room but not converted to sale, the problem could be with the fit.
  • RFID readers fixed at transition doors track product flow between the stock and selling areas. Exception reports and patterns help managers improve customer experience by putting out the best products matching their needs.
  • RFID can improve the checkout time. Customers waiting in line can get extremely impatient. RFID devices can work even at a few feet from the scanner; if a bag full of purchased items comes under the scanner, it queries all the RFID devices and totals the purchases immediately. Check out times can thus be improved over 40% using RFID. Delighted customers drive repeat business and will surely buy more from an RFID enabled customer, as opposed to a regular retailer.
  • The ease of the process also encourages customers to increase their cart size, thereby enabling retailers to achieve top-line growth.



RFID technology allows retailers to better serve their customers online, on-the-go, and in-store. By ensuring the authenticity of products, streamlined in-store experience and sales processes, improved inventory accuracy and theft prevention, it’s a win for customers, a win for the employees, and an even bigger win for the retailer’s bottom line. RFID enables transforming the retail experience to a consistent consumer engagement platform both online and offline. RFID adoption is a true growth engine for an Omni-Channel retailer.

UST Global believes that RFID is the key driver to the three main gears of change with Retailers in the coming years.

  • Loss Prevention – smart use of RFID to attack the Shrink problem – even 1% return is adding directly to the bottom line.
  • Real time Inventory – automation of core inventory processes – producing great savings in labor costs in warehouses and stores counting. Automatic replenishment will reduce stock outs and bring in more revenue from available inventory. This is very much needed for Omni-Channel integration across the supply chain.
  • Bringing Delight in Customer Experience – RFID use cases can help in reducing stock-outs, as well as to give data analytics on customer preference for items (eg., apparel and the sizes used); delighted customers add revenue, adding to the top line.

Overall, RFID will be a game changer in the next 4-5 years, with direct impact on the top line as well as bottom line.


For more discussion, please reach out to: www.ust-global.com