Avery Dennison RFID Blog

RFID Solves Inventory Management Challenges In Store and Online

Avery Dennison Brings RFID Expertise to the Beauty Aisle

The beauty industry is fast growing and now more than ever beauty retailers command inventory visibility, both in store and online, one of the main challenges beauty retailers face is significant inventory distortion, since product breadth routinely is favored over product depth. In addition, beauty has the second-highest levels of retail theft. And, products are frequently misplaced or compromised by shoppers who use them as testers. Retailers also need to facilitate e-commerce sales, especially those with in-store pick up for online purchases.

Beauty shoppers will continue to visit stores for the experience of testing new products and trying looks and fragrances. At the same time they increasingly are seeking the convenience of online shopping.

Read the interview with Robert Pernice, Director, Market Development - RFID Beauty at Avery Dennison

Why is the beauty industry adopting RFID?

Robert Pernice:  In general, inventory inaccuracy of the beauty category is worse than it is for apparel. At the same time, the need for accuracy is greater, especially in high color, low substitution, open sell environments. Also, brick and mortar and e-commerce, the channels that benefit most from the RFID-driven improvement in inventory accuracy, are growing rapidly for beauty.  

 

Robert Pernice

Robert Pernice, Director, Market Development


What are the main challenges for beauty retailers?

Robert Pernice: One of the main challenges is inventory and product visibility, generally beauty products contain liquids and/or have metallic packaging embellishments. Both make UHF RFID tags difficult to read. But Avery Dennison has developed innovative, low-cost tags that work well on liquids and metal. Like UHF RFID for apparel, Avery Dennison programs each tag with a unique ID number (EPC - Electronic Product Code). Unlike barcodes, UHF RFID tags don’t need to be in the line of sight to be read and the in-store scanning process is speedy—an entire beauty department or store, with tens of thousands of items, can be “read” in under an hour.

For retail apparel and footwear, RFID has the ability to improve inventory accuracy, from 65%  to greater than 99%. Improved inventory accuracy and visibility, and the resulting business benefits (1.5 % to 5.5% sales uplift and associated margin increases), are the key reasons behind RFID adoption.

We have discussed retailer benefits, what is in it for brands?

Robert Pernice: Beauty retailers commonly maintain high inventories, and large quantities of unsold product often are returned to brands for full credit. Outside of the resultant increase in unit sales to retail partners, RFID-driven improvements in inventory accuracy and visibility can increase efficiency of the beauty supply chain. Further, beauty products are among the world’s most counterfeited and gray-marketed. In tagging beauty at source, RFID offers increased brand protection; improved visibility throughout the supply chain minimizes opportunities for diversion to non-approved sales channels and provides individual product authentication.

What does it cost to adopt RFID?

Robert Pernice: A basic RFID implementation requires RFID media, hardware to read the tags and RFID middleware to collect the data and interact with retail ERP or WMS legacy systems. The cost of RFID media has decreased precipitously since retail apparel began adopting, 10 years ago. In high volume, the simplest RFID adhesive label can cost well under $0.10. As item level RFID adoption accelerates through apparel into the beauty category, retailers and brands should be asking, “What is the cost not to adopt RFID?”

Discover how RFID can benefit your business, get in touch with Avery Dennison’s team of experts now.

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