Fast Fashion Systems

Chapter 4

Fast fashion retailing: RFID deployment

for enhancing customer value

proposition

Pankaj M. Madhani

ICFAI Business School (IBS), IBS House, Bodakdev,Ahmedabad, Gujarat, India

SUMMARY

Fast fashion retailers can achieve superior shop floor performance through deployment

of radio frequency identification (RFID) tags at item level. Some of the key benefits

of RFID adoption are reduced stock out, reduced labour cost, reduced inventory cost,

enhanced visibility, and increased customer satisfaction. This paper aims to exam-

ine how fast fashion retailers can adopt RFID to achieve overall business excellence

through value added-customer centric approach. The paper gives a better understand-

ing of potential benefits of RFID deployment for fast fashion retailers by presenting

retail marketing mix model. This paper offers a conceptual framework for identify-

ing business value added for a fast fashion retailer upon the RFID deployment and

formulates a list of propositions, which form the broad basis of an empirical research

agenda. The paper provides an evaluation framework for net profit after tax (NOPAT),

return on investment (ROI) and economy value added (EVA) measurement for RFID

initiatives by fast fashion retailers. Future research may be directed to calculate EVA

of such investment in RFID by fast fashion retailers.

Keywords

Fast fashion, Retail marketing mix, RFID, Business value added, Economy value added

4.1 INTRODUCTION

‘Retailing’ is the term used to define its role in the distribution channel, regardless

of its size or type in order to interpret the demands of its customers and to find and

stock the goods those customers want, when they want them, and in the way they

want them (Lazarus, 1961). ‘Fast fashion’ is the term used to indicate, the strategies

adopted by fashion retailers to reflect current and emerging fashion trends quickly

and effectively in current merchandise assortments (Fernie, 2004). Fast fashion retail-

ing requires a fast response – not only in terms of fashion trends, but also in terms

of marketing response. Radio Frequency Identification (RFID) technology is particu-

larly significant in fast fashion retailing, as the fashion business is characterized by a

wide assortment of products, short life-cycles, high seasonality, high volatility, high

impulse purchasing and complicated distribution and logistics operations (Christopher