American Apparel Reduces Inventory Shrinkage with RFID and Analytics

American-Apparel-inventory-shrinkage-RFID-blogA 10-store region of American Apparel locations use item-level RFID, advanced video analytics solutions and process improvements to greatly reduce inventory shrinkage and increase productivity number. These tools are parts of the efforts by the retailer to improve conversion rates and labor productivity.

The stores in this region had strong customer traffic, but also had high shrink numbers. Later the retailer discovered that the problems resulted primarily from employee productivity and inventory issues.

American Apparel had been an early adopter in the current resurgence of item-level RFID technology. The retailer has been expanding its use of RFID, from 5 stores when it began its deployment 4 years ago, to 150 stores now. As usage has expanded, the retailer’s understanding of the technology’s potential has also grown.

“Originally the main focus was sales floor replenishment, which is how many retailers are using RFID technology,” says Stacey Shulman, American Apparel CTO. “Then our focus changed to inventory control and accuracy, and we’ve seen staggering improvements in our strengths there, along with improvements in sales. We’ve also seen shrink numbers drop on average by 55%, in some cases by 75%.”

The combination of customer analytics technology, RFID implementations and improvements in store management and processes created a remarkable turnaround in the 10-store region. “We took a more holistic approach and focused on accountability, and we were also able to measure things that we could hold people accountable for,” says Shulman. “We reduced shrink by 75% in this region, and today it’s one of the best-performing regions in the chain.”