Improving sales turnover in fashion retailing by means of an RFID-based replenishment policy

Abstract

In this paper, we aim to provide evidence of the capability to generate an increase in sales turnover by implementing an RFID-based system able to improve the shelf replenishment operations, reducing stock-out situations in fashion retailing.

To evaluate the increase in sales turnover, we developed a pilot project involving a store of a major fashion firm located in northern Italy. RFID technology was used to generate daily a list of models that turned out to be available in the backroom, but not on the shelves (referred to as “scandals”), to drive employees in the replenishment process. By subsequently monitoring the consumer’s purchase, we estimated the contribution of RFID technology to the store turnover.

We found that increasing the availability of products (and of scandals in particular) on the shelves leads to a significant increase in the sales volume. Moreover, the availability of those products on the shelves stimulates the customers to ask for different sizes or colours of the items exposed, generating further potential for sales increase.

The results of this study may encourage fashion retailers to invest in RFID technology, whose cost often appears as high, since the increase in turnover can significantly contribute to recover the initial investment required. Also, since we carried out an in-field implementation, targeting a real scenario of the fashion industry, our results are realistic, solid and reliable. Fashion retailers can look at them as a concrete possibility to improve their business by adopting RFID technology.

Keywords

RFID fashion industry turnover increase pilot study shelf replenishment

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