Archive for the ‘Retail’ Category

Terso CEO: RFID will see double-digit growth in the healthcare market

Tuesday, August 30th, 2011

Joe Pleshek, the CEO of Terso Solutions, recently penned a column for WTN News about the increasing role RFID is playing in the healthcare and medical sectors. While growth is not nearly as strong as in the retail space, intriguing new use cases are expected to contribute to increased adoption in medical and healthcare.

Here’s an excerpt from the WTN News article:

By monitoring the usage of rental equipment and providing alerts when rental equipment is sitting idle, Texas Health Dallas has saved about $30,000 a month in rental savings. For years, hospitals simply threw money at the problem, buying and renting more equipment to make sure it was on hand when needed. With RFID, fiscally irresponsible purchases are becoming a thing of the past.

The same theory holds true for temperature sensitive items like drugs, orthopedic supplies, and cardiovascular products that can be stored in RFID-enabled cabinets, refrigerators and freezers like the ones manufactured by Terso Solutions. Using secure access, each inventory transaction is automatically captured and processed — in real-time. Then, data can be analyzed to track product usage, improve workflows, and make better business decisions. In addition, costly product spoilage can be avoided.

Hospitals are benefitting from other uses beyond asset tracking. For example, by placing higher-memory RFID tags on high value products, users not only gain the ability to track items, but the ability to keep track of product-specific information, such as maintenance reports and when tools were last calibrated.

Click here to read the full article.

Macy’s updates item level tagging objectives

Monday, August 1st, 2011

Within a year, item level tagging is expected to be well on its way to becoming ubiquitous in the retail supply chain. In fact, the VICS Item Level RFID Initiative has set a goal of achieving industry adoption by mid 2012.

Although numerous reports have stated that retailers like Walmart and Macy’s slowed their tagging programs this spring, any delays are expected to be temporary, with little or no impact on overall adoption.

According to VDC Research, Walmart is still expected to consume 800 million RFID tags for its item level program during 2011. And executives at Macy’s dispute claims that they have slowed apparel tagging. In fact, Macy’s has deployed tagging at six distribution centers that handle furniture and bedding goods for the purpose of improving cycle counts and maintaining physical inventory accuracy.

“We are in the process of evaluating the use of RFID specifically as it relates to replenishment for our apparel and footwear business,” says Bill Connell, senior vice president of logistics and operations at Macy’s. “And we are deployed into six distribution centers for furniture and bedding. We’re quite pleased with the initial results.”

Aside from the deployment at its DCs, Macy’s is piloting RFID at multiple stores. In January, RFID 24-7 reported that Macy’s would roll out item level RFID across seven stores and start tagging several product categories, including men’s jeans and women’s lingerie. It’s unclear if Macy’s has kept to that goal or slowed its trial, although Connell says there have been no changes to the initial plan.

“We have stated that as part of the RFID Initiative, we have an eye toward industry adoption by mid 2012, and we fully expect to be an early mover along that timeline,” he says. “Industry adoption means everybody agreeing to do it, and once that is agreed to we intend to be an early mover.

“Right now we are running pilots in a relatively small number of stores and that’s all about just understanding what it’s going to take for us to deploy on a large scale from a hardware and software perspective, and from the point of view of the store associate’s use of the technology.”

As a result of a tagging slowdown detected by analysts at VDC Research, the firm downgraded its tag forecasts to 2.1 billion units for 2011 (a 51 percent reduction), and to 40 billion units by 2015, a 10 percent reduction from its original forecasts. However, VDC says that there are more retailers committing to deploying RFID than those experiencing delays. They site JC Penney, Gerry Weber, Hudson Bay and Liverpool as all increasing their investments in RFID and tagging more products.

As for the VICS Item Level RFID Initiative (VILRI), the program recently moved into what it calls Phase II, which will include an increased focus on marketing outreach and education, and the formation of a Solution Providers Council, which technology vendors can join for a fee, and be involved in helping to shape the technology offerings used by retailers.

As previously reported in the RFID 24-7 blog, a group of five vendors (Impinj, Motorola, Checkpoint Systems, Tyco and Avery Dennison) have donated a large portion of the VILRI’s $400,000 operating budget over the next two years.

The new funding will also allow VILRA to launch a new web site this summer and to sponsor roundtable discussions and web casts about the benefits of apparel tagging. The group has also hired Cathy Hotka & Associates, retail branding and technology consultants, to talk up item level tagging to retailers and technology suppliers.

“It’s really a way to begin to move forward with a very active communications outreach and education strategy so that the word gets out and the level of activity continues its pretty remarkable ascendancy over the past 12 months and even more so over the past 6-9 months,” says Macy’s Connell, who is also co-chair of VILRI’s communications committee. “The activity continues to increase and we think this will only serve to support that and continue the upward trend.”

VILRI is currently looking at tag applications and coming up with guidelines for suppliers and retailers. In addition, the group continues to research serialization issues, tag performance and data sharing. The group hopes to publish item level tagging guidelines by early next year.

The ultimate goal remains pushing the tagging process back to the source of manufacture. Currently, most tagging is occurring at the DC, or even at the store level. European retailer Gerry Weber is working aggressively to tag all 28 million products at the source, and U.S. retails execs are pushing for a similar result.

“We’re watching what the industry does very closely,” says Connell. “In order to deploy we need to work closely with trading partners to make sure we are source tagging capable. The level of tagging that is required to achieve what we hope to achieve for industry adoption really does necessitate that suppliers and retailers come together and agree to a solution that involves source tagging.”

Global demand for RFID tags nears $2B in 2010; 47 billion tags will be in use by 2015

Tuesday, July 19th, 2011

Global demand for RFID tags exceeded $1.9 billion in 2010, a value that is expected to more than triple within the next five years. Unit volumes are anticipated to increase more than 10-fold during the same forecast period, growing from 4.3 billion tags in 2010 to more than 47 billion by 2015.

According to VDC Research, the trends behind this market growth include, but are not limited to:

  • Scaling of existing projects in a diversity of markets and applications
  • Decreased pilot-to-deployment time and an increased level of commitment
  • A deeper understanding of the technology’s value propositions and limitations
  • More attractive price/performance levels and simplified investment justification
  • Deep integration and continued convergence with legacy systems
  • A continued push for adoption throughout value chains

Although approximately 50 percent of all global transponder revenues are derived from two verticals — transportation and government (primary applications are supply chain, asset tracking, security/access control and ID) — the rapid evolution and scaling within the retail sector is expected to dramatically alter the vertical landscape.

Retail accounted for less than 10 percent of all tag revenues in 2010; however, by 2015, the retail sector is expected to represent nearly 30 percent of total global revenues. Click here to read RFID 24-’s previous coverage on RFID and retail.

Click here to read the full VDC executive summary.

Item Level RFID Initiative receives $400K-plus sponsorship from Impinj, Motorola, three others

Thursday, June 30th, 2011

The Item Level RFID Initiative received a major shot in the arm this week when Impinj, Motorola, Tyco, Avery-Dennison and Checkpoint Systems all signed on as Platinum sponsors of the initiative. The exact amount kicked in by each firm wasn’t available today, but it is believed the checks from the five RFID vendors total well into the high six figures.

(Click here for RFID 24-7′s prior coverage of the Item Level RFID Initiative)

The Item Level RFID Initiative, a consortium of retailers (Wal-Mart, Macy’s Kohl’s, Dillards and more) and industry vendors, was unveiled in November to jump-start the use of item level tagging in retail. The group, which operates under the wing of standards group VICS, operated on a budget of about $40,000 last year. Behind its new Platinum sponsors, that budget will be expanded 10-fold this year and next, allowing the group to accelerate development of guidelines and standards, as well as promote the group to a broader set of retailers and vendors.

ILRI will also be seeking Gold and Silver sponsorships. The move makes sense for suppliers like Impinj and Motorola, who have the most to gain by a faster adoption curve.

In other ILRI news, the Retail Council of Canada has become a member of the group, representing the first foreign interest to be granted membership. Retailers like Gerry Weber in Germany have already reached out to join the group. ILRI will also launch its own web site in July. Stay tuned to RFID 24-7 for more details.

Walmart delays item level deployment; tag predictions for 2011 drop 51 percent

Thursday, June 23rd, 2011

Analysts at VDC Research have detected a slowdown by Walmart and other retailers when it comes to the deployment of item level RFID. When retailers met at the NRF show in New York in January, they were very bullish on item level RFID in announcing the Item Level RFID Initiative.

However, since that date, Wal-Mart’s deployment for women’s apparel has been delayed by approximately two quarters, shifting demand to Q4 and Q1 2012. VDC has downgraded its transponder forecast for the retail sector to 2.1 billion for 2011.

According to VDC, the delay pertains to ensuring that the supply chain has adequate support, time and resources for a successful deployment. It appears Wal-Mart does not want to repeat the previous issues and challenges they encountered when implementing RFID in their supply chain.

Macy’s and American Apparel are also not scaling as quickly as anticipated.

“These delays have caused us to revise our estimates and forecasts for the EPC UHF market downward in 2011 as well as adjust the growth rates in 2012 and 2013,” says Andrew Nathanson, Practice Director at VDC Research. “These changes were limited primarily to transponders in the retail sector. Passive EPC applications outside of retail remain on par with our earlier expectations. We strongly feel that these delays should be considered a temporary bump in the road.”

Click here to read the full VDC report and the updated retail predictions.


Russian retail alliance to open grocery “store of the future”

Monday, June 20th, 2011

The use of item level retail tagging is exploding around the globe in apparel retail and other specialty retail sectors, and now a new alliance in Russia is researching the viability of RFID for grocery stores.

Grocery stores were one of the first sectors to look at RFID, given the high amount of perishable items stocked by supermarkets. However, much of the early research determined that ROI might not be high enough, given the low dollar value of many items stocked at grocery stores. However, as the price of deploying RFID decreases, some of those value propositions increase, and grocery is once again looking at RFID.

The group in Russia hopes to launch a grocery “store of the future” in 2013. According to a report in Nanowerk News, the project has a budget of 350 million rubles, equal to about $11.4M U.S.

An excerpt from the Nanowerk News:

In 2013, assuming successful development of the RFID technology, the project will open Russia’s first model grocery store for the future. X5 Retail Group will provide the platform. The project will also develop sector standards, which are prerequisites for changing the regulatory and legal framework for retail production and trade.

“Cost of the RFID tags is the greatest barrier to their broad use. Once RFID in retail trade begins on a large scale, the cost of the tags will decline and RFID will be extended to other economic sectors. With project success, Russia will become another large market for RFID tags, and that will give Russian microelectronics producers the opportunity to enter an arena where sales are forecast at up to 50 billion tags per year,” Andrey Malyshev explained. “We expect this project to foster demand for nano-enabled products and other RUSNANO projects related to RFID technologies.”


Retailers hope RFID will curb $340B out-of-stock issue

Tuesday, June 14th, 2011

Why are retailers like Walmart and Macy’s so anxious to deploy item level RFID technology? For starters, out-of-stocks are robbing them of more than $430 billion in sales each year. A new study from IHL Group says that major retailers could improve sales by close to 10 percent by entirely eliminating out-of-stocks.

While RFID can’t do that on its own, it’s no wonder retailers like Walmart, Kohl’s and Dillard’s are pursuing item level tagging with such vigor. The IHL study says that more than one in five shoppers leave consumer electronics retail outlets empty handed because of out-of-stocks.

“What it comes down to is that there is no good way of counting your items at this point in time,” says Zander Livingston, CEO and co-founder of Truecount Corp., and a pioneer in apparel item level retail tracking. “It’s tedious on the employee, it’s manual labor and employees can easily be distracted, so there are significant problems with trying to manage your inventory with human beings, particularly if you have lot of turnover. So nobody is ignoring RFID any more.”

[Click here to view RFID 24-7's previous coverage of retail item level tagging]

There are varying reports about the pace of item level tagging at the retail level. Some analysts are calling for explosive year-over-year growth for the foreseeable future. In its 2010 report, VDC Research predicted that retailers would consume 800 million tags in 2011, and 3.4 billion by 2014. Given developments that have taken place over the last year, those estimates will likely be lifted in VDC’s next report. ABI Research, meanwhile, predicted in February that the footwear and apparel sectors would consume 750 million item level tags this year.

However, some tag manufacturers say that major retailers are not adopting as quickly as anticipated. But the intent is certainly there. Major retailers banded together in November to unveil the Item Level RFID Initiative, a group chartered to spread the pace of item level adoption.

And Livingston, who founded his RFID software and services company last year, says his firm signed on four retailers in May alone, although they are mostly Tier 2 and Tier 3 players.

“People are paying attention to RFID now,” he says. “Obviously the smaller retailers can move much quicker and those kinds of companies can jump in and make decisions quickly and see more immediate results.”

Livingston says that he is seeing increased action with retailers of mobile concert items such as T-shirts and hats that travel from venue to venue. The items need to be counted each time they enter and leave a concert venue, creating huge labor costs. RFID can accomplish the task much quicker and more accurately.

“They jumped on this solution immediately,” says Livingston. “They just have really bad inventory numbers and it’s a perfect opportunity for RFID to come in with handheld mobile devices to do cycle counts for them.”

Truecount is also working with a pair of Tier 2 sporting goods stores. Livingston expects those rollouts to be complete sometime this summer. In addition, Truecount is negotiating with a dozen more clients, including a major Tier 1 retailer.

The IHL study outlines how bad the out-of-stock issue is. The study says that the amount of revenue lost to retailers each year through distortion totals $778.5 billion worldwide. More than half (56 percent, or $433.4 billion) is a result of out-of-stock items.

The report says that retailers are in denial about out-of-stocks, and that the true rate experienced by consumers is almost 18 percent, about three times higher than the out-of -stock rate claimed by the retail industry. The report says that Radio Shack has an out-of-stock rate of 22.7 percent, and that Office Max was at 30.6 percent, equal to a loss of $1.96 for each customer entering the store.

North American apparel stores experience about $23.5 billion in annual out-of-stocks, and $16.2 billion in overstocks. “We talk anecdotally about RFID as a help, but the biggest issue is poor planning and lack of staff execution at the store level,” says Greg Buzek, an analyst with IHL. “RFID typically would help about $12 billion of the $39.7 billion inventory distortion problem for apparel retailers in North America.”

According to the Item Level RFID Initiative, EPC tagging can lead to much greater inventory accuracy, moving the industry average from 63 percent to 95 percent. Inventory productivity could be increased by 96 percent, improving from 200 items per hour to 12,000 items/hour with RFID. Item level tagging can also reduce the time it takes for an associate to find a product by 18 percent. Finally, out-of-stocks can be reduced up to 50 percent, with a sales lift of anywhere from 2 percent to 20 percent resulting from item level tagging.

“I’ve always said that a misplaced item is equivalent to not having it available at all,” says Livingston. “There is a breakdown at every level, from the supplier to the DC, the DC to the store, and then store to store transfers. The more times humans touch it, the more distortion you’re going to get because humans are just not 100 percent accurate. So for every one item you are off, it creates two points of distortion within your inventory.

“But once you put in RFID and become confident with the system and you know you are at 99.9 percent inventory accuracy, you will look for that missing item because the system says you have it, and you will always find it.”

Item Level RFID Initiative considers adopting a global approach by partnering with retailers in Europe

Wednesday, May 11th, 2011

The Item Level RFID Initiative made some big waves in January when it unveiled its mission at the National Retail Federation conference in New York. Since then, the group has been relatively quiet as it studies issues like serialization, tagging compliance and how to handle the massive amounts of data that retailers will soon harness from RFID.

The goal of the group, which includes retailers like Walmart, Macy’s, Kohls and Dillards, is to further accelerate item level tagging by publishing industry guidelines and business case roadmaps for return on investment for retailers and suppliers. (Click here to read RFID 24-7′s previous coverage on ILRI)

The group is now considering admitting European retailers into the group to make for a more global approach when it comes to standards. The move seems to make sense, since many retailers utilize the same suppliers in China.

In a recent interview with RFID 24-7, Gerry Weber CIO Christian von Grone explained his desire to collaborate with his North American retail counterparts.

“We have a similar situation in Europe with two or three different initiatives just coming from the ground where industry partners are joining to see what we can we do about RFID in Europe,” he says. “We are part of two of those initiatives. Some of the members of the ally would like to coordinate our efforts (with the U.S.) because in the long run we all meet at the same suppliers in China.”

Gerry Weber belongs to the FashionGroup  RFID and the Working Group Source Tagging initiative.

Bill Hardgrave, who is an advisor to the group and a member of the staff at Auburn University, believes the North American group should seriously consider global collaboration.

“The Item Level RFID Initiative should include all retailers and brand owners,” he says. “In short, I think we need to get them involved and I hope we find a way to do it.”

Grone says that developing separate standards in the U.S., Europe and other parts of the world would only make things more difficult for suppliers. “We should coordinate our efforts so that we have the same technology standards and the same  standards for things like tag placement. We encourage GS1 US Europe and GS1 global and who else is out there to help us coordinate this worldwide.

“In Europe we have a great interest to join the ally.”

Grone says his North American counterparts have shown an interest in making the group more globally focused. “They know that we have conducted lots of research and in some cases we are maybe a little further along when it comes to implementations than the U.S., so sharing those experiences will be a good thing. Besides, the U.S. is very retail driven and Europe is industry driven and putting those strategies together could be very helpful to both of us.”


Retailer Gerry Weber enters Phase 2 of RFID deployment

Sunday, May 8th, 2011

For those that missed last week’s newsletter, we’ve posted it here. Leave a comment and let us know what you think!

Gerry Weber has been a driving force behind item level retail tagging. The German retail chain has taken an aggressive stance on RFID and became the first overseas retailer to source-tag all of its products earlier this year when it began tagging all 28 million items that travel through its supply chain.

As both a manufacturer and a retailer of women’s fashion items, Gerry Weber has added incentive to tag at the source of manufacture. In a recent interview, CIO Christian von Grone explained that in phase two of its RFID program, Gerry Weber will extend the use of RFID to improve front of store and back store operations.

Gerry Weber is also making its RFID software interface available to all apparel manufacturers, and expects utilize cutting edge RFID systems to provide a near real-time view of inventory and to allow customers to shop with interactive fitting rooms.

Grone says that Gerry Weber is the first company in Germany, and possibly in Europe, to embed RFID tags into the garment care labels that are sewn into apparel items individually. One single label provides fabric care instructions, track and trace, and the electronic product code to manage inventory.

The retailer, which operates more than 400 stores and 2,000 shop-in-shop outlets, decided to tag of all its garments so it could gain greater supply chain visibility, in addition to the store level benefits of RFID.

The company invested about $2.8 million to tag all its products. Grone notes that the tagging represents an 8-9 cent premium above the 4-7 cent (Euro) cost to produce the conventional care label that is affixed to every garment. Gerry Weber recently concluded an additional investment of about $2.7 million Euros to roll out RFID, and expects payback in two years.

“We made the decision to source tag everything so that we can make full use of RFID in our logistics process,” says Grone. “Otherwise we would have to split production and split warehousing between owned, retail and wholesale volume, and this would add complexity to our processes. We want to simplify processes with RFID.”

Part of the use case for Gerry Weber was the expectation that as tagged goods arrive at retailers, they will begin to use RFID as well. Therefore, Gerry Weber profitability is bound to improve as a result of having more products readily available at retail outlets. Grone says Gerry Weber has already seen several retail pilots develop since it went to 100 percent source tagging early this year.

“We’ve been 100 percent source tagging since January and in those three months I’ve had about as many questions about RFID from retailers as within the last year when we were in the press and had big press conferences and presentations,” says Grone. “The retailers start to believe that the technology is working when they see the chips in the garments. We’re seeing the first pilots with mid-sized retailers. The larger players are undecided.”

Grone says that the retail pilots are starting small, with a store using a single handheld reader to start off with. He stresses that it is not important to capture all the benefits of RFID at the outset, but to just gain an understanding about what the technology can achieve.

Although Gerry Weber understands the value that comes from having stock on the store shelves at all times, a major driver for the source tagging program was that electronic article surveillance (EAS) could be incorporated into the RFID tag as well, eliminating the added cost of applying a second tag to the garment.

“The biggest driver is replenishment and out of stock minimization and all those other things that we know about, but it wouldn’t have worked without the EAS part,” says Grone. “The use case just wouldn’t have worked without the EAS component.”

Gerry Weber still has inventory carrying the old EAS tags, and will funnel those products through its supply chain until June. At that point, the EAS security gates in stores will be removed, and the chain will rely solely on RFID for the EAS security function. The RFID tag will not be deactivated until the garment is purchased, allowing an alarm to signal if someone leaves the store without paying for an item.

When it comes to phase two of its RFID program, Grone says Gerry Weber will first look at replenishment programs at its larger stores. “If we don’t have an item on the shelf but in backroom storage, we have to replenish it as soon as possible, thus enabling further sales,” he says. That’s no surprise, as replenishment and reducing out-of-stocks is a major driver for every retailer.

Also in the works is a pilot for using intelligent fitting rooms powered by RFID, with touch screen monitors that display information about the item the customer brought into the fitting room. By utilizing the touch screen, customers can signal a store associate to bring another size or color of the item to the fitting room, enabling a better customer shopping experience.

Gerry Weber is currently in the process of establishing the software interface between manufacturers’ software and its own hybrid supply chain management tool. So far, two software manufacturers have agreed to implement this in their software. “We expect this to be up and running in June, with more to follow,” says Grone. “By the end of the year, I expect about 30 percent coverage with our suppliers,” including all of the major ones. That will enable source tagging to spread to other apparel manufacturers at a quicker pace.

Another phase two project includes piloting the Mojix solution at one store, most likely to begin in September. The Mojix STAR system enables organizations to use inexpensive UHF passive RFID tags for real-time location tracking, bringing economic advantages to supply chain management and asset tracking. By using Mojix, Gerry Weber will gain a near-real time view of its inventory, enhanced by location information. Store associates, for example, could generate a list of misplaced items in a store, and link product placement information with sales data to enhance visual merchandising operations. Furthermore, the Mojix system could replace the store’s RFID EAS gates.

Gerry Weber will also likely look to enhance EAS functionality with a “tamper-protect” tag, using the new NXP G2xx generation of RFID chips.

“We are very excited about new technology,” says Grone. “The interesting part is how do you get the industry to take part on this? Luckily in Europe, we have many fashion companies who have at least 20 percent owned retail as well. Companies like VOS Sports or Oliver that have 10-20 percent volume through their own retail outlets can make RFID pay off in their own retail operations, and also by helping the other 80 percent or so of their volume going to the broad market. Therefore, all retailers benefit.”

Omnitrol solution delivers food traceability for Firstlight Foods

Friday, April 29th, 2011

New Zealand-based Firstlight Foods knows that its customers want to know where and how their beef was produced, and how fresh it is when it arrives at the marketplace.

Through a partnership with Omnitrol and RFID systems integrator Trident RFID, Firstlight now has those checks and balances in place. Firstlight, which processes and sells high quality beef products to retailers like Whole Foods in the U.S., will rely on an Omnitrol solution that enables real-time manufacturing visibility and item-level tracking in food, meat and beverage traceability across global supply chains.

The solution will enable Firstlight Foods to automatically track venison and beef production and to accurately generate electronic meat pedigree records enabling field-to-fork traceability.

“We have successfully worked with Omnitrol in the past in delivering food traceability, so when Firstlight Foods called on us for meat traceability, we knew Omnitrol would have an answer,” says D’Arcy Quinn, Chairman of Trident RFID. “The Omnitrol platform is the industry’s most versatile solution and the easiest to deploy and scale with RFID readers at the Firstlight site. With reliable real-time tracking data, Firstlight will be able to improve their processes, reduce product damage, and automatically generate electronic records for pedigree compliancy in their meat production plants.”