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American Apparel Adding 50 More Stores in Aggressive RFID Rollout

The retailer states that RFID has helped it reduce shrinkage, improve stock levels and decrease employee turnover, and that RFID-enabled stores are outperforming those not using the technology.

American Apparel, a vertically integrated clothing manufacturer and retailer based in Los Angeles, is ramping up its item-level RFID tagging initiative, having just signed an agreement to deploy Xterprise's Clarity Advanced Retail System (ARS) software at 50 of its retail locations—25 of which will be located in the United States, the remainder overseas—by the end of this year. This will bring the total number of RFID-enabled stores operated by the company up to 100.

The firm, which attributes improved stock levels and store performance to the technology, has already deployed radio frequency identification at 50 of its retail stores, most located in the United States.

"I make decisions based on numbers," says Stacey Shulman, American Apparel's VP of technology, explaining her company's aggressive RFID rollout. "And the ROI on RFID-enabled stores is no more than six months. Stores that are using the RFID system have proven to reduce shrink, improve stock levels and reduce [employee] turnover."

After a careful analysis of these results, American Apparel's management team decided that pursuing RFID technology on a broad scale will help it manage its stores more proactively. Shulman attributes the improvements in RFID-enabled stores to inventory management and reduced shrinkage at those locations.

"Sales floors are better stocked because we can police it better," she explains. "It's hard to know, in a non-RFID store, if the stock levels are off on the sales floor. With RFID, we know we don't need to do an audit to find out."

However, she notes, it's not just about having the proper range of colors and sizes available on the sales floor—it's also about items being in the correct place, and stores with RFID technology being more organized overall.

The Clarity ARS software is built on a Microsoft platform and, for in-store retail applications, contains five item-level modules: a module used for shipment verification, receiving and transfers of merchandise from one store to another; a module for counting inventory and searching out individual RFID tags using handheld readers; a module that generates fulfillment lists, showing a retailer which items it needs to pull from back stock and move onto the sales floor; an integrated point-of-sale (POS) module enabling a retailer to utilize the unique ID number encoded to each tag, in order to conduct transactions and reconcile inventory levels based on sales; and a module used to commission unique IDs and encode these to tags.

American Apparel employs all of these modules to receive RFID-tagged items into store inventory, and to maintain and update inventory databases. If an item is transferred from a non-RFID retail store to one of the RFID-enabled locations using the ARS software, employees can utilize the software to generate a serial number and encode it to an RFID inlay that an employee can then attach to each item.

Based on the information collected, the inventory software then informs the workers regarding which items need to be moved to the sales floor for shelf restocking, and which should be put into storage. Employees then use a fixed interrogator to read the RFID tags once more as garments leave the store's back room, to confirm that the items are, indeed, being brought out to the sales floor. (Each RFID-enabled store keeps bifurcated inventory for its back stock and its sales floor, so that at all times, it knows the stock levels in the back stock versus on the sales floor.) If this reader collects the RFID tag number of any item that should not be brought to the sales floor, or if it fails to collect the tag ID of a garment that is supposed to go to the floor, the software triggers an alert, thereby showing which items are missing or superfluous.

Employees also perform regular inventory counts on the sales floor, using handheld readers. This information is compared with the POS data, and the software generates a list of any discrepancies that may exist between the two databases.

Per the 50-store agreement, Xterprise will supply each retail location with its ARS software, as well as fixed-position and handheld RFID readers from Motorola Solutions and RFID tags made by Avery Dennison and LS Industrial Systems.

American Apparel will use an internal team to install and test the system at each store, says Shulman. In addition to the Xterprise software, which is currently utilized at 27 American Apparel locations, the retailer employs RFID software supplied by Vue Technology (now owned by Tyco Retail Solutions) at 23 stores.

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