In this article, learn about:
What is RFID?
How Nordstrom utilizes RFID
RFID compliance requirements for Nordstrom suppliers
The challenges and opportunities of RFID adoption
The future of RFID in fashion retail
What is RFID?
Radio Frequency Identification (RFID) is a technology that uses electromagnetic fields to automatically identify and track tags attached to objects. These tags contain electronically stored information that can be read from several meters away, even without a direct line of sight.
How is RFID Used in Fashion Retail?
Retailers are increasingly turning to RFID to track inventory, optimize operations, and improve customer experience. Some key uses include:
Inventory management: Retailers use RFID to track products in real time, reducing the need for manual stock counts and improving accuracy. This helps maintain optimal stock levels, prevent overstocking or stockouts, and streamline supply chain operations.
Related Reading: What to Do When Walmart Runs Out of Stock
Reduce shrinkage: RFID helps prevent theft, misplacement, and fraud by providing better visibility into inventory movement. It also enables quicker identification of missing items and supports loss prevention efforts.
Omnichannel fulfillment: RFID enables retailers to manage online and in-store inventory efficiently, ensuring accurate stock availability across all sales channels. This supports services like buy online, pick up in-store, and ship-from-store models.
Automation: RFID technology minimizes manual tasks by enabling automated checkout, smart fitting rooms, and self-service kiosks. It speeds up processes like receiving shipments and restocking shelves, freeing up staff for customer service.
Related Reading: What is RFID (Radio-Frequency Identification) at Walmart?
Other Industries that Use RFID
Retail isn’t the only industry that makes use of RFID technology. It’s also widely utilized across other industries to improve efficiency, accuracy, and security. Some notable examples include:
Healthcare: Hospitals and medical facilities use RFID to track medical equipment and ensure patient safety through RFID-tagged wristbands.
Automotive: Car manufacturers use RFID for parts tracking, vehicle identification, and even keyless entry systems in modern vehicles.
Agriculture: RFID is used to track livestock, monitor food supply chains, and track the delivery of goods.
Entertainment: RFID wristbands and tags are increasingly used for event access control, venue entry, and cashless payments at festivals, concerts, and sporting events.
The Difference between RFID and Traditional Barcodes
Traditional barcodes and RFID tags serve similar purposes but operate differently. Barcodes are optical, requiring visual contact with a scanner.
RFID tags use radio waves, allowing for greater flexibility and range. They can also store more complex data, making them more versatile for various applications.
It’s important to note that barcodes and RFID are not necessarily replacements for each other but rather complementary technologies. Barcodes provide a cost-effective way to identify products at the point of sale or in warehouses, while RFID enables faster, automated tracking without requiring line-of-sight scanning.
How Does Nordstrom Use RFID?
Nordstrom has integrated RFID (Radio Frequency Identification) technology to improve inventory tracking, which leads to better and more accurate purchasing and allocation decisions. By requiring RFID ticketing on merchandise, the retailer can maintain real-time visibility into stock levels, streamline replenishment, and, ideally, improve total sales.
In rolling outthese requirements, Nordstrom stated they expected these benefits to trickle down to Nordstrom suppliers as well, with better inventory management hopefully leading to stronger sales.
What It Means for Nordstrom Suppliers
Starting in 2022, Nordstrom implemented new compliance standards for suppliers, mandating RFID ticketing on a wide range of products, such as apparel, shoes, accessories, and home and gift products. This standard impacted all its sales channels, including Rack stores, Nordstrom Stores, Canada Stores, Nordstrom.com, and NordstromRack.com. Nordstrom referenced Target, Macy’s, and Bloomingdales as examples of successful RFID implementation.
In its initial announcement to suppliers, Nordstrom indicated its long-term goal to move towards passive UHF RFID-encoded tickets across all product types and categories. Since the initial introduction, Nordstrom has continued to work towards this goal, now requiring RFID ticketing for Rack shoes and drop-ship goods, which was not included in the initial rollout.
RFID Compliance Requirements at Nordstrom
Suppliers can find complete requirements in Nordstrom’s RFID & Non-RFID Ticket Standards within the supplier portal. Nordstrom does not provide RFID tags; instead, the full responsibility for implementation falls on the supplier.
To comply with Nordstrom's RFID requirements, suppliers must use GS1-compliant UPC/EAN barcodes. These barcodes are used to determine the GTIN-14, which is part of the Electronic Product Code (EPC). The EPC is then encoded in the RFID tag for seamless tracking. It should be noted that the data encoded into each RFID tag is serialized, ensuring that every individual product receives a unique identifier.
To implement these requirements, Nordstrom recommends one of two approaches: using a third-party provider or handling the printing and encoding in-house. Third-party vendors offer suppliers a streamlined solution for generating compliant RFID tags. For example, FineLine Technologies provides a service that guarantees a 48-hour turnaround on RFID tags that meet Nordstrom’s GS1 standards. Suppliers who choose this option can ensure quick, accurate compliance without the need for in-house printing and encoding capabilities.
Suppliers who fail to meet Nordstrom’s RFID expectations can expect to see charges. As of April 20, 2023, Nordstrom implemented chargebacks of $250 per PO and $0.90 per unit for non-compliance.
Opportunities for Suppliers
While RFID implementation requires investment, it offers significant advantages. Enhanced inventory accuracy lessens the risk of stock discrepancies, leading to fewer chargebacks and penalties. Additionally, improved visibility into product movement across the supply chain allows for better forecasting and replenishment strategies.
RFID compliance can drive efficiency, reduce lost sales due to out-of-stock products, and provide more visibility into the supply chain. In Q2 of 2024, Nordstrom credited RFID with improving inventory accuracy, enhancing in-stock rates, and accelerating delivery times, contributing to a 3.4% increase in net sales.
The Future of RFID in Fashion Retail
RFID technology is becoming an essential tool for modern fashion retailers, and its role is expected to expand as new innovations emerge. As inventory management, loss prevention, and omnichannel fulfillment remain top priorities, retailers continually explore ways to enhance RFID's capabilities.
Retailers are increasingly integrating AI and RFID to optimize operations. AI-powered analytics can process RFID scan data to identify sales patterns, automate restocking, and improve forecasting accuracy. Another trend is the shift toward RFID-enabled smart stores, where automated checkout systems and interactive fitting rooms enhance the shopping experience.
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