LPP Starts Phase 2 of RFID-Rollout at Reserved

Optimizing Stocks at Store Level with RFID

With RFID integration in all Reserved stores, LPP is pursuing the objective of continuously controlling and optimizing stocks at store level. In the stores, employees use RFID handhelds for regular stocktaking. RFID technology in the cash desks records additional information. The inventory data from all stores is aggregated in a cloud. Goods reorders from the distribution center can be initiated in real time. In the store area, RFID supports employees in replenishing stocks from the back store. The central application requirement of LPP was that with the introduction of combined EAS/RFID hard tags, a source tagging process should also be established.

Today, combined EAS/RFID hard tags are used, which circulate in a defined process between the stores, the production service provider, and the more than 500 production sites. Since not all products can be tagged with hard tags, items such as shoes, bags or accessories were at first excluded from the RFID rollout. This will now change, reports Alexander Yashin. The technology was evaluated, and the appropriate label has been identified. As soon as the soft tag solution is also fully rolled out, almost 100 percent of the goods in the stores will be trackable via RFID handhelds and permanently installed reading points.

100 million items sold per year

LPP operates nearly 500 Reserved stores in Europe, Eastern Europe, the Baltic States and Russia. There are also 31 franchise stores – 20 in Poland and 11 in the Middle East. Every year, LPP’s main brand Reserved sells around 100 million items. 90 percent of the products offered in the stores and online shop are clothing items. The remaining 10 percent include shoes, perfume and accessories such as earrings, bracelets, scarves, necklaces or rings. The main distribution center (DC) in Gdansk was opened in 2008. From 2013 to 2015, the facility was modernized.

In 2018, LPP started its further expansion and now, the center covers an area of 91,000 square meters. The DC in Gdansk is supplied with goods from more than 1,100 manufacturers from Europe and Asia. From the DC, more than 1,700 LPP stores – including the Reserved stores – in Europe and the Middle East as well as the regional e-commerce fulfillment centers (in Poland, Russia, and Romania) are supplied with picked and packed goods.

The LPP DC in Moscow, which is managed by an external logistics partner and which covers an area of 14,000 square meters, was commissioned in 2012. The DC supplies over 300 LPP brand stores in Russia and Kazakhstan as well as the Moscow Fulfillment Center. For e-commerce fulfillment, LPP operates four logistics centers in Gdansk, Stryków, Moscow and Romania. A dedicated training center was set up in Gdansk to train store managers. 70 RFID instructors employed by LPP are at work in the stores on site. Depending on the size of the store, training the employees for handling RFID tags and readers takes between two and four weeks. At peak times – during the pilot phase – 140 LPP employees were involved in the RFID project, particularly in IT. Today, the number of RFID project employees is around 80.

Reserved rollout on schedule – Mohito rollout in its initial stages

In March 2018, LPP launched a pilot project in three selected Reserved branches. Prior to a complete rollout, implementation, technology and integration options were optimally adapted to the individual needs of all stores. In the pilot stores, 100 percent of the garments were tagged so that the tests could be carried out under realistic conditions. The rollout started in February 2019 and almost 300 of the 500 Reserved stores worldwide have already implemented RFID. While the rollout in the LPP flagship brand is still in full swing, Alexander Yashin announces that the next rollout is already inits initial stages: "Also in 2020, LPP will start the roll-out of RFID technology in the stores of the Mohito brand."

RFID is Not ROI-Driven

LPP's management does not view the RFID application as an isolated feature that must achieve an ROI on its own at a defined point in time, as Alexander Yashin reports: "The integration of RFID technology is part of a bigger picture. The objective is to optimize internal processes from the supply chain to in-store processes, to achieve satisfied customers and increasing sales. In this overall picture, RFID is a part that is not extracted in numbers. The process-related advantages, especially in inventory management, clearly outweigh the insertion costs.” At the beginning of the rollout, the target was a stock accuracy of 98.5 percent in the stores. In the meantime, it has become apparent that even 99.5 percent or more can be achieved.

Technology

Hard Tags are the First Choice

The decision to use reusable RFID-enabled hard tags is based on a decision of the LPP management. Hard tags were already used without RFID at Reserved as EAS transponders for retail security. The tagging process was thus defined. Ten UHF RFID tunnel readers from Checkpoint Systems were installed in the DC in Gdansk and Moscow for massive encoding of the tags during Inbound and to record the store specific commissioned deliveries during Outbound. Four to 15 UHF RFID handhelds are used in the stores depending on the total area. Each POS – the number of which also varies according to store size – is equipped with Checkpoint Systems' “RFID POS Reader V2” and “RFID POS Detacher” in the counter.

The EAS/RFID hard tags used by LPP are not suitable for identifying all the goods offered in the stores. LPP is currently evaluating the use of UHF RFID labels for a higher degree of transparency in the stores. "As soon as we have extensively tested the suitable labels, our concept envisages that we will be able to record around nine percent more goods in the stores via RFID with the soft tag solution," explains Alexander Yashin.

100% In-House Application Development

Checkpoint Systems was already a long-time LPP partner for the supply of EAS hard tags. They are now responsible for the production and management of the EAS/RFID hard tags. Stores send the hard tags removed during the sale to Checkpoint Systems. There, tags are inspected, repaired or replaced and then sent in coded form to the producers for source tagging. To date, Checkpoint Systems has produced more than 100 million UHF RFID-enabled hard tags for LPP.

The hard tags accomplish an average of five to six circulations before they need to be replaced in the tag cycle. Checkpoint Systems is also responsible for POS RFID integration with readers and antennas. The complete IT-based application development for stores, including data handling and store acquisition software, was developed by LPP's IT department.

Strategy

Save Five Seconds per Checkout Process

RFID is part of a large-scale digitalization strategy of LPP. Processes should become more efficient and costs should be reduced. At the same time, customer satisfaction and sales are to be increased. RFID contributes to increasing the availability of goods and optimizing replenishment. An average of five seconds can be saved in the checkout process, as manual scanning of a barcode is no longer necessary. "Five seconds does not sound like a lot – but when you calculate over a year in over 500 stores, the time savings are enormous," Alexander Yashin emphasizes. Initial analyses from the RFID-enabled stores already in operation show that sales increases of three to five percent are realistically achievable.

Streamline E-Commerce Fulfillment

Once the rollout is concluded, the roadmap envisages that online orders can be sent directly from a store. "Shipment from stores saves costs resulting from two separate stocks for stationary and e-commerce. If 100 percent of all items are RFID tagged, the border between the inventories can be eliminated," says Alexander Yashin, looking at an additional benefit that is part of an Omnichannel Roadmap that can be fully implemented once the RFID rollout is complete.

LPP

Company Snapshot

The clothing company LPP was founded in Poland in 1991. Today, the group includes five fashion brands: Reserved, Cropp, House, Mohito and Sinsay. In total, LPP sells around 210 million articles per year. With over 25,000 employees, a turnover of over 1.8 billion euros was achieved in 2018. The more than 90,000 square meter distribution center in Gdansk supplies over 1,700 stores of all five brands with 1.8 million articles daily. With approximately 500 shops in Europe and the Middle East, Reserved is the flagship among the LPP brands.

Alexander Yashin

Alexander Yashin is an RFID program manager and has been jointly responsible for the RFID rollout in all Reserved stores since January 2018. Since the start of the project, he has been working on hardware and tag selection as well as technology integration in the distribution center. In the current rollout, Alexander Yashin is responsible for leading the program that includes several projects related to RFID.