Posts Tagged ‘item-level tagging’

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.”

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.


Summary of RFID Live Day 1

Tuesday, April 12th, 2011

Avery Dennison’s Jack Farrell kicked off the opening day at RFID Live by elaborating on the company’s shipment of its one billionth tag last week and pointing out that RFID “is in the early stages of a very strong growth cycle.”

Farrell, vice president and general manager at Avery Dennison, said Avery is seeing the biggest growth in the retail apparel item level tagging, but “in three or four years it’ll be something else, whether a pharmaceutical application or authentication of consumer goods.”

“The industry has come a long way in the last seven years when it was focused around pharmaceutical, pallets, aviation and supply chain,” he said. “Clearly that early investment has been fundamental in allowing us to get to this point where we are seeing exceptional growth. It’s across the board and it speaks well of the continued momentum behind RFID when you have large companies rolling out the technology because very simply — they know it will make them money.”

In addition to retail, Avery Dennison is seeing active pilots in the coffee industry, as well as golf and wine sectors.

Farrell believes that the continued popularity of smart phones, coupled with item level retail tagging, will lead to a revolution in consumer retail habits. Noting that research shows that smart phones will outnumber PCs and laptops sold by 2012, Farrell said that increased mobile connectivity will enable an entirely different consumer experience.

“Retail item level tagging has led to significant growth, but the paradigm is changing for consumers,” he said. “People are looking for an entirely different retail experience and RFID can play a significant role.”

Farrell said that by 2013 to 2014, RFID will play a significant role in consumer product authentication, ensuring that consumers are getting what they pay for, while offering manufacturers new brand protection when it comes to counterfeiting. “This is the next big opportunity,” he said.

For example, RFID will ensure that accessories like printer cartridges are authentic, and that parts for expensive items like coffee makers are genuine.

Avery Dennison hits 1 billion mark for inlays

Wednesday, April 6th, 2011

Avery Dennison RFID has shipped its one billionth ultrahigh-frequency (UHF) RFID inlay — an industry first – and company officials say they will hit the 2 billion mark much faster than the seven years it took to get to one billion.

“We are confident that our second billion chips will be shipped in much less than half the time it took to ship our first billion,” Jack Farrell, vice president and general manager of Avery Dennison RFID said in a release. “As use cases expand and companies invest in IT process improvements, RFID solutions become almost a mandate for the future. This is a very exciting time for the RFID industry.”

Avery Dennison RFID inlays are attached to or embedded in labels and tags produced by multiple label converting partners and distributed in more than 60 countries worldwide. By providing a unique identifier for individually tagged items that can be read without the line of sight required by traditional barcode systems, RFID-based systems can collect and organize data exponentially faster and more accurately.

Over the past year, Avery Dennison RFID inlays have become more widely used by major apparel brands and retailers in item level marking systems. Retail item level tagging is expected to drive much of the growth in RFID during the next 12 months.

Avery Dennison sees UHF applications expanding beyond supply chain and into healthcare, authentication and transport logistics, as well as retail apparel. In addition to pioneering the use of UHF inlay applications, the company has moved into the established HF RFID space to facilitate the growth opportunities presented by that technology.

“We are excited about the overall future growth of RFID in both UHF and HF,” said Maggie Bidlingmaier, Avery Dennison RFID global director, sales and marketing. “The recent momentum in near-field communications technology, enabled by RFID-equipped smart phones, is particularly exciting, as it opens up the opportunity for many new applications for consumers as well as businesses.”

Retail item level tagging gets a boost from new source tagging platform developed by Impinj

Tuesday, April 5th, 2011

RFID solutions provider Impinj today announced the launch of two components for implementing item-level RFID across retail markets and supply chains. Impinj’s Monza® 5 tag chip and STP™ source tagging platform are expected to enable widespread scaling of RFID retail inventory management solutions.

The new products were driven by the Item-Level RFID Initiative announced last November by major retailers including Walmart, Macys and Kohls. The STP source tagging platform, which is capable of encoding up to 1,750 tags per minute, will be commercially available in May.

“We’ve been able to encode tags at speed of 1,750 tags per minute in an inline situation and over 1,100 tags per minute in a bulk situation,” says Scot Stelter, senior director of product marketing at Impinj. “These are very high speeds and over 6 times faster than other chips and systems. So it’s a significant step forward. This is not just an incremental improvement. This is not just going from 90 tags a minute to 100 tags minute.”

The Monza 5 chip, optimized for single-use tag applications that demand high read reliability and low applied tag costs, is already available. The Monza 5 is expected to eventually phase out the popular Monza 3 chip.

Watch for this week’s issue of RFID 24-7 for more in-depth coverage on this development.


Article provides an inside look at retailer Gerry Weber’s RFID initiative

Wednesday, March 16th, 2011

Retail leaders from Walmart and Macys who make up the Item Level RFID Initiative are on record that item level tagging at the retail level is now a customer-driven initiative. Despite the operational gains and enhanced revenues that retailers gain from item level RFID, the customer is the top priority.

That’s true with overseas retailer Gerry Weber as well. A trailblazer in RFID technology, the retailer is achieving inventory accuracy values of 99-plus percent. A recent article in the European trade press outlines some of the chain’s biggest successes with RFID.

Among the gains are lower shrinkage and higher transparency, more sales, lower security costs and faster goods in.

Click here to view RFID 24-7’s previous coverage of the Item Level RFID initiative.

From the article:

Lower shrinkage, higher transparency: All items wholesaled to other retailers—accounting for 80 percent of Gerry Weber’s business—are RFID-scanned after being boxed. This 100 percent accurate reconciliation of what’s in the box with what’s on the manifest has reduced discrepancies in customer orders to zero, as it provides ironclad proof of contents. The process of redistributing merchandise between stores is also greatly accelerated. On the other end of the supply chain, total capture of delivery information has resulted in very low shrinkage, thanks to high inventory transparency and reconciliation.

Faster goods in: When goods come into the store, most retailers do manual checks and scan individual barcodes into the store’s inventory management system. This can take hours or days. With RFID, you can scan each box with a handset, unpack it and get the inventory out on the floor. Returns processes will also be greatly accelerated.

What happened to RFID and CPG?

Monday, March 14th, 2011

Supply Chain Digest’s Dan Gilmore ran a very insightful piece on the plight of RFID in the CPG space last week. Gilmore traced the euphoria surrounding CPG and EPC tagging that started in earnest back in 2003. While there were very successful pilots run by the likes of Gillette and P&G at major retailers like CVS and Walgreens — mostly geared around the tagging of promotional and sale items at point-of-sale islands — the real value of RFID in the CPG to retail value chain has not been realized.

Granted, the industry benefitted greatly from the CPG false start; according to the article, more than $1 billion was invested in RFID technology from the early Walmart initiatives, and clearly the item level tagging in apparel that is on its way to becoming ubiquitous would not be at the level it is today without the CPG trails.

From the SCD story:

While RFID progresses and even thrives in other segments, in the CPG to retail value chain EPC tagging is simply stopped in its tracks. WalMart is doing nothing there, now focused on apparel programs. A P&G spokesperson told me this week that as far as he knows, Procter & Gamble has no active RFID projects or pilots currently underway – this from a company that was leading the charge not that many years ago, and had at one point I believe at least 20 people working on RFID. P&G, as just one example, developed what became the industry standard requirements document for RFID-capable fork trucks. Even the UK’s Tesco stores and Germany’s Metro chain, which continued ahead after WalMart had clearly started to bail, have done nothing new for about three years.

Footwear & apparel sectors will combine to use more than 750 million item level tags in 2011

Monday, February 7th, 2011

Item-level tagging continues to accelerate in the apparel and footwear markets, with those industries now making up an increased share of the total world market for RFID tags. According to a study just released by ABI Research, more than 750 million RFID tags will be used in global apparel markets in 2011.

(Click here to view RFID 24-7’s previous coverage on item level apparel tagging.)

“RFID systems allow apparel retailers to get a better handle on inventory, reducing costs and preventing out of stock situations that result in loss of sales,” says ABI Research principal analyst Bill Arnold. “The growth in retail item-level tagging is huge, both in shipments and in total spending. The average growth rate is close to 60 percent for the next three years. In fact, the number of tags that will be used for retail ILT in apparel alone is likely to exceed the total number consumed over the past five years for all RFID markets combined.”

Major retailers such as Macy’s, JC Penney, and Walmart are leading the charge to make RFID systems commonplace in the retail environment.

Arnold says that the typical ROI times for such RFID deployments are only three to six months, representing a very compelling business case for retailers. However, Arnold says that the global economy is still causing delays in deployments. And a major supplier of RFID systems to the apparel sector recently told RFID 24-7 that a large retailer recently pushed back its deployment schedule by six months.

“The state of the global economy is still creating serious delays in getting money allocated to retail RFID,” says Arnold. “Executives are still very uneasy about business conditions and availability of credit, and while ILT systems are technically scalable right down to small businesses, credit will be the big limiting factor for smaller independent stores.”

A related use of RFID in retail is in EAS (Electronic Article Surveillance) systems: loss prevention tags containing only one bit of data. This segment is led by Checkpoint and Tyco Retail Solutions.

Research director Michael Liard adds, “Retail adoption of RFID at the item level parallels the course barcodes took about 30 years ago. The main difference this time is that retail department stores, not grocers, are leading the charge.”

ABI Research’s new study The Retail Apparel RFID Item-Level Tagging Market” provides current analysis and a five-year forecast of UHF adoption at the item-level in the retail apparel market. It discusses market drivers and inhibitors, along with a summary of the key RFID solution providers and product suppliers.

Top 5 trends that RFID solutions providers should be aware of in 2011

Tuesday, January 25th, 2011

VDC Research Group has announced its predictions for the key trends anticipated to shape the 2011 RFID solutions market. 2010 has been a banner year for the AIDC market, with many RFID suppliers experiencing double-digit growth.

The top five trends include a continued surge in item level retail tracking; asset tracking applications that go beyond location; the emergence of authentication and anti-counterfeiting as leading applications; increased benefits from solutions convergence; and more revenues will come from new accounts rolling out RFID for the first time.

Here’s a more in-depth look at each prediction!

Adoption of item-level tracking in retail continues to surge: VDC expects item-level tracking applications in retail to continue to expand rapidly in 2011, as the solution is adopted in new accounts, scaled and expanded in existing accounts and embraced globally. Growth will also be further driven as RFID continues to migrate toward the point of manufacture.

Asset tracking applications go beyond location: Asset tracking solutions will continue to expand beyond just providing the location of an asset. They will increasingly be leveraged to provide more information about the asset—its environment, movements and users—as a means to support and enhance business processes, increase asset utilization, support compliance and minimize costs.

Authentication and anti-counterfeiting emerge as leading applications: Product authentication and anti-counterfeiting applications are anticipated to grow quickly and expand into a broad range of verticals over the next 3-5 years as companies look to create a more secure supply chain. These applications are expected to extend the functionality of existing systems beyond track and trace to protect brands, further improving ROI.

Solution convergence will provide key benefits: Although there may be overlap in functionality and capabilities, the convergence of RFID, barcode and other AIDC solutions will provide the end-user more actionable business intelligence with little disruption to existing solutions and processes. The combination of these technologies will be particularly beneficial for applications and environments, such as supply chain and inventory management.

More revenues to come from new accounts: Although approximately 80% of total global RFID revenues in 2009-2010 were from established accounts that have been evaluating/piloting the technologies for at least 18 months, VDC expects a shift in consumption coming from new accounts to occur in late 2011 and early 2012. This tipping point will be a function of favorable pricing, increased packaging of solutions and availability of off-the-shelf solutions, more benchmark and performance metrics, enhanced standards and improved business models.

Here’s why Best Buy should re-consider item-level RFID tagging

Thursday, December 30th, 2010

 I’m not sure why Best Buy has de-emphasized its item level tagging program, but here’s one reason why execs at the electronics chain should seriously think about pursuing it again. It’s called greater inventory visibility.

The day after Christmas I arrived at Best Buy to return a 26-inch Samsung flat screen that came out of the box on Christmas Day with a one-inch gauge across the screen. (that’s a discussion for another day, but what happened to quality checks?)

My Best Buy store associate quickly advised me that “our inventory is so messed up” and then, after waiting several minutes, informed me that they had no more TVs of that model in stock. Given their hazy-at-best inventory visibility, I couldn’t help but think that the model I needed was buried in the stock room somewhere.

Their suggestion was to drive about 15 miles to their nearest store. “It looks like they have three or four in stock,” the associate told me. Again, not an overwhelming vote of confidence for their inventory management system. With a blizzard about to hit the Boston area, driving 15 miles wasn’t an option anyway. So I asked the store manager to replace the damaged unit with the next model up, which features newer LED technology. He agreed to do so, although it cost me a few more bucks.

So here’s the Best Buy gain id RFID had been in use. For starters, the entire returns process would have been seamless. The 10 minutes or so that the store associate spent locating inventory could have been spent serving customers on the day after Christmas – a very busy buying day. That likely equated to lost revenue. And if the store associate could have guaranteed  me that the item was in stock at another store, I may have made the drive there. Instead, they sold me a highly discounted TV at a loss.