Business
Zara is the flagship brand of textile empire Inditex. The company wants to improve the management of its stores and increase the speed of their garments replacement by installing an identification chip on clothing, an initiative that has already tried other competitors.
The chips of Radio Frequency Identification (RFID) have more than ten years in the market, but several retail chains in the past as Wal-Mart or JC Penney, they discovered both that the advantages and disadvantages of the RFID (BJORK).
In the case of JC Penney, the company found that the new chip caused interference with existing anti-theft sensors. In principle, the chain decided to remove the anti-theft sensors, but after the increase in robberies decided to scrap the project.
However, Zara, the flagship brand of Inditex, Implemented the technology in more than a thousand of its stores by the end of 2014 to improve monitoring and inventory management. The technology helped learned from the experiences of their competitors.
The president of Inditex, Pablo Isla, has ensured that the tracking chip whose size is approximate twice a SIM card phone helps the fashion group to track their stock better and more quickly replenish their stores of clothing.
The RDIF gives to the company great visibility to know exactly where each garment is located. The RDIF changes the way the company operates its stores.
The chip RFID can store information on any item to which they are linked and transmit that data to a scanner via radio signals when requested (Stelter).
Zara is implanting the chip into plastic labels safety clothes, an innovation that allows the chain of 'fast fashion' to reuse the chips when the labels are removed at the time to pay.
Zara has acquired more than 500 million RFID chips, one in six of those who are expected to use clothing manufacturers in 2014 worldwide.
Inditex began experimenting with Tyco Integrated Fire & Security, a world leader in solutions for performance improvement store and security provider; The Company has announced an agreement with the Inditex Group, one of the largest fashion retailers in the world, to provide RFID-based intelligence throughout the chain inventory (Wharton High School).
Tyco's solution, which is being implemented in 700 Zara stores in 22 countries, provides an important added value to the business of Inditex. For Inditex, a retailer very customer focused, have a fast and reliable visibility into all styles, colors and sizes of the garments is a fundamental aspect. This visibility allows Inditex create accurate marketing plans and product catalogs as and offers an exceptional customer experience throughout the Zara chain.
The visibility of real-time inventory supports the strategic objectives of Inditex, ensuring that the right products are in the right place at the right time. With this RFID-based solution, Inditex is achieving operational efficiencies by improving processes and better inventory controls to reduce shrinkage and theft. Thanks to this, the retailer optimizes the investment in inventory and gets maximization in sales and margins (Loeb).
The implementation of this new generation technology is one of the most important changes in the operation of the stores of the Inditex Group to date since the "fast fashion" strategy of the company at beginnings of 2000.
Inditex-Zara uses hard tags and strippers at the point of sale with RFID and acoustic-magnetic technology provided by Tyco. Tyco also manages the recycling program of Inditex labels, which allows the reuse of RFID labels with an approach that combines profitability with environmental concerns. With this solution, Inditex is leveraging the benefits of RFID-based visibility while controlling shrink with a powerful anti-shoplifting acoustic-magnetic technology inventory.
Inditex has constantly offered new collections to attract customers. Now, the entire inventory has visibility in real-time allowing Inditex to keep up with fashion trends and meet the needs of buyers.
Another retailer's experiences
Despite the initials reticence of some large retail chains such as Wal-Mart, the technology is taking hold gradually. For example, in the United States of America, another distribution group, Macy's expanded the use of RFID chip in 2015, after tests the company revealed that has helped increase sales and improve margins.
In Europe there are also groups that have adopted this tracking technology, such as the French Oxylane Group, which owns the chain of sporting goods stores Decathlon, or Marks & Spencer in the UK, it has also announced its intention to monitor all the products it sells.
Privacy concerns
The use of the RFID brings new concerns to different Consumers Group in Europe and United States of America that considers the major retailers may use the RFID chips technologies to track the apparels and accessories sold in their stores out of the stores. Today, that intention was denied by Inditex-Zara, Macy's and other retailers, because it is not in the interest of the retailers to track the cloth outside the stores and warehouses of the company . The RFID chips are useless for the company outside the stores and warehouses of the company because it not contributes to the inventory management and cost reduction. Besides, the idea of the technology is to reuse the chips once the customer paid for an item and returned to the warehouse to tag a new accessory or apparel.
Works Cited
BJORK, CHRISTOPHER. Zara Builds Its Business Around RFID. 16 September 2014. Web. 21 de August de 2016.
Loeb, Walter. Zara Leads In Fast Fashion. 30 March 2015. Web. 30 August 2016.
Rfid24-7. INDITEX CONTINUES RFID ROLLOUT TO 2,000 ZARA LOCATIONS. 17 March 2016. Web. 21 August 2016.
Stelter, Scot. Next Generation RFID Technology is Already Here. 3 May 2016. Web. 21 August 2016.
Wharton High School. Zara’s ‘Fast Fashion’ Business Model. 18 February 2016. Web. 21 August 2016.
