Reference #: ITRI-WP146-0409 Date: April 1, 2009

Item-Level RFID for Apparel: The Dillard’s RFID Initiative


Item-level RFID has the potential to improve many in-store processes for retailers. In particular, the business case for RFID for apparel retailers looks promising. Previous studies have shown the benefits of RFID at the pallet and case level, such as reducing out of stocks and improving inventory accuracy. It seems logical, therefore, that item-level RFID would provide even more benefits. In this study, we examine the use of item-level RFID at a major apparel retailer, Dillard’s, Inc. Specifically, the use cases of inventory accuracy, out of stocks, cycle counting, and loss prevention are investigated. Results clearly indicate the improvement in inventory accuracy due to RFID. Improved inventory accuracy leads to fewer out of stocks, less safety stock, and better ordering and forecasting, among others. The ability to quickly and accurately conduct cycle counting facilitated by RFID, rather than doing large scale inventories once or twice per year, offers the advantage of keeping inventory accuracy high. Finally, for loss prevention, RFID provides the advantage of knowing exactly what was stolen, when it was stolen, and from where it was stolen. In addition to the insights this provides to improve loss prevention methods, knowing exactly what was stolen allows the retailer to adjust inventory counts accordingly and order more product, as needed.