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Avery Dennison

Avery Dennison supports retailers in leveraging the full power of RFID

Articles | By Avery Dennison RFID | 10 March 2017
Source tagging items allows retailers to benefit from over 99 percent inventory accuracy. Source tagging items allows retailers to benefit from over 99 percent inventory accuracy. Photo: Avery Dennison

When and how to modernise

“As a world leader in RFID solutions, Avery Dennison was involved in the first largescale RFID projects in the retail industry,” Francisco Melo, Vice President and General Manager, Global RFID, Avery Dennison, says. In an interview with “RFID & Wireless IoT Global”, Melo outlines the importance of RFID - assisted product visibility and inventory accuracy in retail today – and how they can produce tangible benefits for retailers.

Francisco Melo, Vice President and General Manager, Global RFID, Avery Dennison

Overcoming the challenges of RFID integration

“Retailers today understand the benefits of RFID, even if they underestimate the ease of adoption and the ROI the technology offers. Their primary concerns are when and how, not why,” Francisco Melo, Vice President and General Manager, Global RFID, Avery Dennison, explains. “Of course, some players are always moving faster than others, but the benefits of improved accuracy and stocktaking are now clear and transparent to everyone in the marketplace. We‘ve not had any potential client say they don‘t understand the need for RFID in a long time. They are more preoccupied by the challenges of successful integration, and that is where we come in.”

Strong growth indicates further adoption in retail

“It‘s undeniable that a lot of retailers have not yet embraced RFID technology. Most large apparel and footwear brands have adopted RFID solutions, but over all sectors of retail, penetration is still in the single digits,“ Melo states. “However, the strong growth that the RFID industry is seeing every year indicates that those numbers will continue to increase as RFID is penetrating larger parts of the retail sector.”

In order to increase RFID adoption, solutions partners such as Avery Dennison have to provide a realistic assessment of the capabilities of RFID technology: “Avery Dennison creates awareness and works with retailers to assess their needs and the advantages open to them. RFID is not the solution to every problem in retail, and we don‘t advertise it as such. But if you understand how accuracy and visibility lead to increased success, you can leverage RFID.”

Francisco MeloFrancisco Melo “To support our RFID customers, we have perfected a five-step adoption process from the initial business case to full adoption. This facilitates integrating our end-to-end RFID solutions into existing business operations.”

Avery Dennison supports retailers the entire way

Francisco Melo outlines the road map Avery Dennison has laid out for RFID projects: “We first support retailers in better understanding their challenges and then deciding for themselves whether they want to employ RFID to tackle them. It is our belief that most retailers can benefit enormously from RFID adoption. Financial measuring of stock accuracy skews higher and obscures real conversion from stock to sales. Studies show that most retailers have an effective inventory accuracy of around 65 percent. RFID offers them over 99 percent, and if they have a system in place that can act on that improvement, they can realise important benefits.”

RFID enables omnichannel strategies

Consumers increasingly look for items online and make at least a partial decision before going to a store. This change in consumer behaviour increases the importance of item availability, Melo explains: “If a retailer does not have the ability to tell the consumer if an item is in stock, they will miss out on a sale. On the other end of the spectrum, listing an item as available online when it is out of stock in reality undermines consumer trust. Therefore, precise capturing and sharing of data within the retailer‘s network and online is necessary. A lack of reliability leads retailers to create buffers, thus stocking items which are essentially not for sale.”

Instead of establishing costly buffers, retailers can leverage their network of stores: “Often, items which are sold out in one store are available in another. The ability to measure inventory across all stores leads to higher overall conversion.” All in all, Melo is certain of one thing: “All omnichannel projects should begin with RFID.”

Bringing the online shopping experience to the store

“From a consumer perspective, the entire shopping experience is strongly impacted by product visibility. Online shopping has shaped retail expectations,” Melo says, “And self-service terminals or magic mirrors in changing rooms enable retailers to bring the online shopping experience to the physical store: the user interface can scan the item the consumer is trying and propose other, similar articles, display other colours and sizes, display promotional offers, and more. It also becomes possible to directly order out of stock items or show which stores still have them. Digital sales tools are blurring the line between online and physical, providing the same visibility and connectivity.”

Avery Dennison is a global project partner

“In order to leverage the full effects of RFID solutions, retailers need a strong project partner. We have realised more roll-outs and pilots than anyone in the industry and have proven a reliable and trustworthy partner from start to finish. This means that the company was able to build a unique body of knowledge and experience.” Retail RFID started gaining traction in the US, then Europe, and is now expanding in Asia. European fashion retailers looking to adopt today benefit from a mature technology, Melo says:

“Avery Dennison is an international solutions provider. We‘re represented in all important markets. However, we‘re not guided by a country approach – we have a customer approach. Many of our clients are international retail chains with stores in more than one country or region. This is why customer relations are so important to us: if we have implemented a solution which works for the customer‘s challenges and business model, we can roll out this solution, with market-specific adjustments, all over the world.”

RFID solutions benefit from economy of scale

For Melo, the global structure and market position of Avery Dennison represent an important competitive advantage for clients aiming to adopt RFID for their entire operation: “The nature of globalised retail is conductive to global thinking. Source tagging, for example, is part of the vast majority of RFID solutions. Since source tagging is so important, being active in one country is not enough. The solution has to be implemented in all countries where product is manufactured – and once all production sites use source tagging, there is no reason not to leverage this in all points of sale around the world. The economy of scale of RFID solutions is very beneficial to retailers. Wide, integrated supply chains require wide, integrated solutions.”

Last modified on Friday, 10 March 2017 12:58
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