As the industry has learned over the past three-plus years, the stakes in maintaining a strong supply chain are high. Retailers need to ensure shoppers always have access to the product they want, where they want it, or else they risk losing loyalty in a difficult environment. Perry Ellis is managing this challenge through the rollout of RFID technology, in partnership with Mojix, that will help the retailer manage its supply chain from the store level all the way through broader inventory planning.
Approximately 95% of Perry Ellis products are tagged with RFID before they leave the factories where they are produced. Advanced RFID capabilities have been implemented in 40 stores and the retailer is in the process of rolling them out chainwide. The technology quickly comes into play due to the small size of the typical store — between 1,500 and 3,000 square feet. Inventory needs to be carefully sorted between the front and backroom, and each store needs to have a clear view of inventory to ensure customers aren’t disappointed by an out-of-stock.
“At the time of sale for any product, the built-in integration with our store platform uses the RFID system to tell us what’s in the inventory so it knows it’s not lost or missing,” said Sandeep Baghel, VP of Information Systems at Perry Ellis in an interview with Retail TouchPoints.
Additionally, the use of RFID will help Perry Ellis better get a more granular understanding of what products are selling in what stores. It’s one thing to know that a certain SKU is a top seller at a certain location, but understanding the exact size and color that is driving those sales can take merchandising to the next level.
“If you look purely at purely physical inventory, we don’t have big discrepancies — it’s less than 2%,” said Baghel. “But if you look at sizes, that varies a lot. That means we have opportunities lost at the store because we don’t have the right size, and replenishment is driven by what corporate believes is in system. If sizes have been messed up for whatever reason at our stores, we’re not going to be planning properly and not going to be selling properly. The plan is, once all 40 stores get all the hardware and software deployed, we’re going to be syncing up our corporate inventory with whatever the RFID is showing so that the planning team has the accurate inventory data to make the make their decisions better.”
Having RFID-tagged items also drives efficiency and a great customer experience on a moment-by-moment basis. The traditional example is how tying RFID to associates’ phones lets them efficiently find the right size, color or other option to reduce the time customers spend waiting. However, RFID also can be used to bust friction across the entire experience, including all the way through checkout.
“With the traditional method you scan one barcode at a time,” said Baghel. “Now, if somebody bought 10 items, I just wave my RFID reader in front of them and scan it all at the same time. It’s a productivity gain.”
While RFID technology has been discouragingly expensive in the past, Baghel believes that it is going to be come more affordable — and necessary — as adoption grows. Proper use of RFID, both in-store and across the supply chain, will set the standard for customer expectations in the coming years.
“RFID cost has been plummeting, so it is becoming more and more reasonable for retailers to use it,” said Baghel. “All the big box retailers like Walmart and Target are using RFID, and they’re mandating their suppliers to have RFID tags. As the volume is going up, the cost of using those RFID tags is going down. That means for any other retailer, it’s very important to have that knowledge of accurate inventory and where it is sitting. I believe that with RFID investment, the potential is limitless.”