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Global Logistics Focus Sept.21, 2015

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8A THE JOURNAL OF COMMERCE SEPTEMBER 21.2015 SPECIAL REPORT GLOBAL LOGISTICS FOCUS 2015 of the pioneers in that pivot, installing RFID systems to manage inventory in all of Ameri- can Apparel's 250 stores. Today, RFID "is all about managing inventory in the store itself" by gaining visibility into the entire retail chain inven- tory so retailers "can reduce out-of-stock, reduce 'shrink' (from theft and loss); get rid of third-party audits of their inventories; and reduce their inventory by 20 percent," Frew said. Retailers such as American Apparel in the U.S., Tesco in the U.K. and Zara in Spain also are using RFID to manage their omnichannel marketing efforts. Thanks to such initiatives, when customers order online and then pick up a product they ordered at the store, inventory accuracy "is extremely high," Frew said. That's critical because customers can quickly lose faith in a retailer after ordering a product online, rushing to a store to pick it up, only to dis- cover it's not available. Frew's company makes the software for such RFID-based omnichannel inventory-management sys- tems, while also integrating the technology for retailers. Overall, the RFID sector has turned out to be quite different from what most industry experts anticipated a decade ago, Frew noted. Although RFID tag prices plummeted from their initial heights, it gradually became clear they would never become cheap enough to get an ROI when tracking low-value products, such as cans of beans, on an item-by-item basis. But R FID tags have become cheap enough to provide an ROI for the item- by-item tracking of many high-margin, higher-value apparel products such as fashionable slacks, skirts and suits. "RFID moved from the $2 can of beans to the $70 shirt," Frew said, "and that accelerated its adoption. That way, RFID could have more impact." Overall, the apparel industry turned out to be a greater challenge for RFID software developers than consumer packaged goods because of apparel's enormous complexity. Consider that there are many more SKUs in the apparel sector than in the CPG sec- tor, Frew noted. Tracking every item in an "RFID MOVED FROM THE $2 CAN OF BEANS TO THE $70 SHIRT."

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