As a consequence, performance in many fashion stores is poor. In fact, 69% of consumers believe that customer service levels in shops have declined significantly during the last 5 years. Despite the fact that 66% of consumers go shopping with the intention of making a purchase, every other purchase decision remains unfulfilled. This is not helped by high out-of-stocks which average 15–20% across European fashion stores.

As well as increased levels of service and availability, criteria that affect consumers’ purchase decisions are price, style, size/fit and waiting time. Consumers are becoming more and more choosy about where they shop. Although a good and well-displayed assortment is important, they also take into account a shop’s cleanliness and helpfulness of staff when deciding where to shop.
Retailers worldwide have found these issues sufficiently compelling to implement RFID at store level, and the results are promising. One example is Mitsukoshi, a leading Japanese luxury department store, which is now seeing a 20% sales lift. This can be attributed to two areas of store process improvement:

•  enhanced store replenishment capability, whereby the supplier receives an automatic notification when a store’s inventory of a specific SKU falls below a defined threshold.
•  improved customer service. Other retailers in both the US and Europe have started implementing RFID.

By 2010, 30% of fashion retailers will have implemented RFID at item level in stores and the supply chain. This vision is based on KSA’s analysis and our extensive experience of working with fashion retailers. RFID has been tested with positive results leading to good ROI. Efficient item-tagging has taken place in the Far East with read rates already at 100%. The cost of tags is falling steadily. Mobile readers are much cheaper, representing a low investment, while the implementation of an RFID programme has high benefit for stores.

Improve Store Processes

The findings of a study carried out by KSA, coupled with its deep knowledge of in-store processes, identified three key areas in which RFID can make improvements: reduction of out-of-stocks; reduction in shrinkage; and customer service. Time is saved in the back room because RFID enables goods to be received automatically, there are fewer moving errors and goods are stored correctly. Because items are easier to find in the back room, it is quicker to get them to the shop floor. Once items are on the shop floor, sales associates can stock-take more accurately and much faster. Product performance can be tracked with the maintenance of planogramms leading to better assortment availability. As sales associates spend less time searching for items — because RFID allows them to know where items are at any given time — customer service is improved. Sales associates can stay fully engaged with their customers. Another direct improvement is the reduction in shrinkage. The more expensive and fashionable a product, the better suited it is for RFID tagging. The product categories that best lend themselves to tagging are designer jeans and lingerie.

Product Flow Management

KSA (www.kurtsalmon.com) has developed a unique tool to help accelerate benefits from RFID item level tagging and improve retailers’ decision making processes. It enables RFID-supported store processes and illustrates product flow in a virtual fashion store environment. It is also designed to simulate and implement the real-time benefits of RFID for specific store processes, giving higher levels of visibility and enabling problem solving. It is structured by key store processes and enables process changes combining RFID and mobility (immediate feedback). The store manager dashboard provides a set of KPIs calculated on RFID read events data. It is structured by process or level of criticality enabling process and performance monitoring locally by store staff.

Summary

Today’s deflationary retail environment is placing enormous pressure on retailers to achieve growth by keeping margins at high levels and saving costs. As they strive, relentlessly, to raise their sales by even half a per cent and cut costs at the same time, RFID is emerging as a real solution. By improving store processes it increases sales and, most importantly, shopper satisfaction, the basis for sustainable growth.