Adoption of RFID Technology: The Case of Adler—A European Fashion Retail Company

Abstract

• (a) Situation faced: Adler Modemärkte AG (Adler hereafter) is a fashion retailer that operates mainly in the German-speaking countries. At the beginning of the twenty-first century, first movers in the fashion retail sector began to adopt RFID technology. Adler monitored this new technology and decided to adopt it in 2010, even though it was not sure at that stage whether its use would be profitable. However, Adler hoped to improve process efficiency and effectiveness in the long run to increase customer satisfaction through faster checkout. Moreover, the company expected that RFID technology would help to prevent theft, and to provide better visibility of inventory.

• (b) Action taken: Careful planning is required if the goals and promises of RFID are to be achieved. With the help of a consultancy, Adler managed the adoption of RFID as a project that spanned 2 years. The overall concept was first sketched and designed, followed by selection of a suitable provider for the required hardware and tag supply. Next, the concept was realized and prepared for rollout before employee training was provided and the new technology was rolled out in more than 170 stores.

• (c) Results achieved: Most of the project’s goals were achieved. Inventory accuracy and transparency of the flow of items contributed to an increase in sales. RFID also improved the follow-up procurement of items, resulting in additional increase in sales. The efficiency of in-store processes was improved through faster item registration, and the speed of the customer payment process at the point of sale was significantly improved, thanks to parallel scanning by RFID-enabled cash desks. Finally, retail shrinkage was reduced.

• (d) Lessons learned: Careful planning is required when conducting large improvement projects, including delegating responsibilities, as consultancy companies are specialized and experienced in managing such transition projects; doing an early check on the feasibility of process improvement projects; waiting for the right moment to conduct the project; and considering the project’s critical risks and people’s sensitivities.