Can RFID-based replenishment increase turnover of fashion retailers?

What is it about?

We provide evidence of the capability to generate an increase in sales turnover in fashion retailing, by implementing an RFID-based system that improves the shelf replenishment operations and reduces stock-out situations.

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Why is it important?

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, to drive employees in the replenishment process. Then, we estimated the contribution of RFID technology to the store turnover. We found that increasing the availability of products 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.