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Brought to you by Retail Insider and K3 Retail

Inditex has long led the race for efficiency in the supply chain, with its Zara fashion chain the global exemplar in managing stock, and one of the key tools in its armoury is Radio Frequency Identification (RFID).

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It might not look interesting but it is.

Whereas most other retailers have not bothered utilising the technology there is a growing acknowledgment that as the preferred operating model is multi-channel then the best way to gain visibility of stock over the various channels is by putting RFID tags on products.

This has the effect of making it possible to track individual goods through the supply chain and to potentially have a real-time record of exactly where they are in the system. Research from GS1 UK found that inventory accuracy increases on average from 63% to 95% through using RFID.

This radical improvement in visibility enables retailers to fulfil Click & Collect orders with stock taken directly from the shelves of the stores rather than from central distribution centres. There is also the opportunity of fulfilling online orders for home delivery from specific stores.

The reality is that without this visibility of goods it makes it very tough for retailers to maximise the value from their supply chains. It is no surprise therefore that the number of RFID projects is accelerating – particularly within the clothing sector.

GS1 UK found that over 25% of the top 20 retailers in the UK are already using RFID tags to some extent in their stores, while another 20% are trialling them, and 15% are investigating their use and likely to begin a pilot.

RFID is not exactly new but it has arguably found that its time has now come and the price of individual tags has continued to drop over the years whereby their cost is not a limiting factor.

But don’t think the technology can turn an average clothing retailer into a Zara clone overnight because improved stock visibility must be combined with more optimised forecasting capabilities and the ability to react to any demand changes across channels with speed and agility. Nobody said selling clothes in 2016 was easy.

Glynn Davis, editor, Retail Insider

K3 Retail deliver multi-channel solutions that enable retailers to create joined up shopping experiences for their customers whether they choose to buy on-line, direct, in-store or via mobile. It has over 20 years’ experience delivering award winning solutions, to more than 175 internationally recognised retail brands.