Packaging

New Avery Dennison Video Demonstrates How Item-Level RFID at American Apparel(R) Helped Achieve 99% Inventory Accuracy and a 14% Sales Increase

Monday 06. July 2009 - A new video that guides viewers through the innermost operations of American Apparel's item-level RFID inventory management system can now be accessed by apparel, retail and RFID professionals

Titled RFID Case Study — American Apparel, the video is the first multimedia production that demonstrates how the largest apparel producer in the U.S. deployed item-level RFID to overcome inventory accuracy and replenishment challenges at selected retail stores, while appreciably increasing sales.

The video, produced by Avery Dennison Corporation (NYSE:AVY), takes its audience through each critical step of the inventory management process with selling floor and backroom footage, merchandise flow animations, comments from customers and store employees, and insightful remarks by key members of American Apparel’s RFID team.

The System

American Apparel’s new item-level inventory management system consists of Avery Dennison AD-222 RFID inlays; printers and tags from Avery Dennison; RFID antennas, and handheld and portable readers from Motorola; and in-store inventory tracking software. The AD-222 RFID inlays, which are an essential part of the solution, were chosen for their consistency, accuracy and use beyond the apparel market.

According to Zander Livingston, American Apparel’s RFID director, the system was fully operational four months from the program’s launch and delivered a full return on investment just four months later.

In operation, the system tracks every SKU from the time it is received until it is processed at the point of sale. It also facilitates stock replenishment within minutes of a sale, and helps ensure inventory accuracy and the stocking of available product on the selling floor. Because RFID tags do not require a line of sight to be read, a whole store inventory that once required 120 hours to complete can now be accomplished in 15 hours. Notes Livingston, “I was particularly blown away by the labor time we saved.”

American Apparel is realizing solid bottom-line sales benefits with the new item-level RFID system. “The easiest (benefit) to measure is the 14% sales uplift we’ve seen at the RFID stores compared with our non-RFID stores,” Livingston reports in the video. “This is due to the fact that we have more items on display for the customer and we have improved customer service at the RFID stores.”

Livingston explains that the item-level RFID inventory management system boosts customer service by facilitating faster selling floor replenishment and greater sales associate availability. The system guides replenishment specialists to the correct areas in stockrooms, which allows them to quickly retrieve merchandise, restock it on the selling floor and tend to customer needs. As a result, service time has improved 10 – 25%.

Other key item-level RFID inventory management system metrics: The system delivers 99% visibility of store inventory and can reduce labor by up to 30% and inventory by 15%.