By 2021, 3,000 Levi's Stores Will be Equipped with UHF RFID

Increased Inventory Accuracy in 3,000 Levi's Stores

In North America, Europe and Asia Levi's articles are sold in 3,000 exclusive stores. Around two thirds of these stores are operated by franchise partners. The smaller part of the stores is managed directly by Levi's. The challenge facing all stores: How can customers always find the exact item they are looking for?

"When you look at the jeans assortment, it becomes clear how extensive the store inventory is. In addition to a large number of cuts, they are available in different colors and washes as well as numerous length/width combinations. On average, customers can choose from 200 different options - 120 for men and 80 for women," says Stefan Otte, giving an overview.

If a customer is looking for a particular model in his or her size, these jeans should ideally be placed on the designated shelf. The frequent store reality: Either the model they are looking for is in a different location or has been sold out without triggering a replenishment process.

Reasons for the Global Rollout in 110 Countries

Search times reduce turnover because the time spent advising the customer and selling goods is minimized.

"Through the use of RFID technology, employees become digital shopping experts and advise customers on products that they themselves have not yet had in their hands," states Stefan Otte, summarizing the reasons for the global rollout. After an intensive evaluation and pilot phase, the decision was made to integrate an RFID-based solution in all 3,000 Levi's stores. Today, inventory accuracy is 98 percent.

Source Tagging of 50 Million Fashion Articles per Year

Levi's implements 100% source tagging of all merchandise. The RFID tags are not (yet) used for the supply chain processes down to the individual stores. Stefan Otte explains why source tagging is still the right decision for Levi's. "Source tagging is the most cost-effective option for Levi's. Tagging in the DC would be costlier and more time-consuming".

1.75 Million Euro for RFID Tags

Levi's sells around 25 million items through its own stores. A further 25 million items are sold via 50,000 sales outlets – online and offline – in 110 countries worldwide. The cost per day: seven cents. The company thus invests around 1.75 million euros per year in RFID tags, half of which are not used in Levi's store network.

"In production, all items are marked with RFID tags, although their RFID functionality will not be used later. This is the only way, because separating goods with and without RFID chips in the process is not efficient. We also believe that the retail industry is changing. In the future, more and more multi-brand retailers will prefer goods with RFID tags, as RFID tags improve store processes. Levi's tags can be used by any retailer without restrictions," emphasizes Stefan Otte.

Rollout Follows a Five-Year Plan

The first tests with RFID technology started at Levi's as early as 2016. After evaluating the results and selecting the required hardware and software, the company was able to start the worldwide rollout in 2018.

"All US stores are already fully RFID-enabled. The rollout in all European stores is currently in full swing: the solution is already integrated in around 500 of the total of 850 stores." says Stefan Otte. After the implementation in Europe, the rollout will start in Asia. According to the five-year plan, the rollout should be completed by the end of 2021 to all 3,000 stores in Levi's three main markets - North America, Europe and Asia.

RFID Integration Leads to 98% Inventory Accuracy

TA 100 percent tagged inventory is the basis for numerous process optimizations in the stores. An inventory on the entire shop floor with an RFID handheld device takes a maximum of 20 minutes. "The shortened time required for a complete inventory creates the time to carry out a 100-percent inventory twice a day," explains Stefan Otte, and continues: "Fixed routes through each store are defined for the inventories. This guarantees a short-term and comparable duration, and an accurate data acquisition".

The achieved accuracy of the inventories in the store is on average over 98 percent. Recorded inventory data is used for automated floor replenishment reports. The reports immediately trigger the replenishment of missing articles from the backstore.

Technology

Inventory Within 20 Minutes with RFID Handhelds and Tablets

During the pilot phase in a US store, the hardware selection was made to suit Levi's requirements. In addition to the UHF RFID labels and handhelds, tablets are the third part of the hardware package that will be used in every store worldwide. The analysis of the captured inventory data is carried out in each Levi's store using a retail-specific software solution. Levi's is implementing the physical rollout on its own and with the support of an external systems integration partner.

Three Technology Partners Involved in the Global Rollout

Avery Dennison delivers the pre-coded paper labels directly to the manufacturers of Levi's products. Detego is responsible for the software used in the stores and on the handhelds and tablets. As a software application supplier, Detego supports the implementation and integration of additional features that are planned further on in the rollout. Levi's is procuring the handhelds from Zebra Technologies to record tagged products in the stores. The communication with customers and the retrieval of stocks is done via iPads from Apple.

Strategy

Effectively Prevent Inventory Gaps, Advise Customers Digitally

"The increase in inventory accuracy to almost 100 percent opens up new potentials in sales," emphasizes Stefan Otte. Employees gain an exact insight into the stocks almost in real time through daily inventories. Customer wishes are fulfilled immediately.

"If an item is ultimately not available in the store, sales staff can use the iPads to interact directly with customers. Either alternatives – comparable cuts or washes – are presented, or stocks in other stores are queried. Deliveries directly to the customer's home or to their favorite store will be possible without any problems in the future," emphasizes Stefan Otte. These features are part of Levi's planned Associated Ordering System (AOS).

Five Percent Increase in Sales Thanks to RFID

The objective of being able to sell every customer the desired product is significantly reinforced by RFID. Customer satisfaction ensures a positive perception of the shopping experience. This has been proven to increase sales: "Stores in which the RFID application is already fully operational record an average increase in sales of five percent," reports Stefan Otte.

Stefan Otte sees additional savings potential in the further development of the technology: "We are currently using physical shielding between the front and backstore so that stocks are precisely separated. As soon as we can switch to virtual shielding based on geolocation and algorithms, the construction measures will no longer be necessary.

Levi's

In 1853, Levi Strauss founded a trade for fabrics and haberdashery in San Francisco, which later became known as Levi Strauss & Co. Strauss recognized a need for robust work trousers. As a result, he and Jacob Davis, a tailor, created the first jeans. In 1873 they received a US patent for "waist overalls" with metal rivets at the stress points.

The first product line in 1890 received the batch number "501". Today Levi's is one of the largest branded clothing companies in the world and is known worldwide for jeans fashion. Net sales in 2018: 5.6 billion dollars. Levi's employs 14,400 people worldwide. Levi's products are currently sold in over 50,000 retail locations in 110 countries and online.

Stefan Otte first joined Levi Strauss & Co. in 1996 as a Senior Financial Analyst. In various positions within the company, he was responsible for the growth and optimization of over 1,800 franchise stores worldwide. His focus: expansion in retail and wholesale, strategy development, and financial planning.