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NXP RFID Business Solutions End Term Project

Smart Retail Experience Using RFID Name Roll Number Chetan Kotyalkar 2009B61 Bhargav Karkar 2009C02 Tushar Milind Oka 2009C04 Anant Agrawal 2009C21

Project Selection and Rationale

Problem: Low Per Ticket Sales for Retailers Possible Causes:

Dip Stick Survey: Customers unaware of promotional schemes and new variants Poor Visibility due to unavailability of merchandize at desired/fixed location

Literature Review
Merchandise planning Assortment Planning Sales planning Price management Promotion planning Warehouse management Retail Industry RFID Overview: According to IdTechEx (2006), the retail industry will comprise 44% of the global RFID market value for systems including tags by the year 2016. Expected to replace the barcode technology because: Provides much more functionalities No line of sight of the reader Speed and process efficiency

Functions of RFID in Retail

In-store operation

Literature Review
Apparel retail industry is facing challenges in the form of: Increasing competition Giving better retailing experience to customers Increasing pressure to reduce costs Evolving Customers Trends More demanding Shorter fashion cycles Increase in demands for new customer experience RFID technology Raises efficiency through real time data tracking Enables innovative customer service offerings Brings Cost Savings

Case Analysis: As-Is

Customer confused with the variety present; goes to changing room

Promotions and Schemes visible only in selected areas

Customer Unaware Improper Combinations found : Loss of Sale

Customer observes the Assortment Plan in the store: Difficult to find merchandise Even more difficult to find the complementary merchandise Also customer unaware of any promotions/schemes.

Customer enters the store

Project Analysis
Shift in Focus Shift Of Focus: RFID Operational Efficiency Sales Promotional Strategy RFID in Retail Supply Chain

Project Analysis
Target Group
RETAILER Shoppers stop Ebony Piramyd Future Group (Pantaloons & Central) Lifestyle CURRENT FORMAT Departmental store Departmental store Departmental store Multi brand store
Departmental store

Implementation Challenges

Benchmarking Paxar & TheBigSpace RFID enable mirror

Implementation Plan (Process Flow Diagram)

A passive RFID tag is attached to each clothing item. It contains information like color, size, brand and promotion Reader detects the tag and sends the information to the store's server

Customer brings a clothing item in the dressing room

The server retrieves the corresponding information from the database and sends it to a display

The display then shows the other available colors/sizes and other complementary garments

The point of sale data is captured also using this tag and then removed from the garment

The tag is re-used and updated with the information about the new garment it is being attached to

Implementation Plan (System Details)

System Specifications: RFID-related hardware RFID Tags: UHF EPC G2 RFID Reader Digital Embedded Display: 21 LCD Software platform: Customized from vendors

Project Implementation (Information Flow)

Customer enters the changing room Following RFID tag data is read by the reader and sent to the system:
Brand Gender Type Color Promotion

Depending upon the brand, garment type and genderpromotional schemes as well as complementary products are displayed

Cost Benefit analysis and Payback period

Expenses Parameters RFID Tag (U-Code, contactless)(assuming 1lac merchandize on the shelves at a time)) RFID Tag readers( 20 nos. for each changing room) Software Cost( Approx.) Cabling and other Hardware (Approx.) Training and Maintenance(per year) Total Expenses Revenues Parameters Footfall (number of customers/year) Sales per store(approx.) Net Profit Investment Earning Payback Period (Week) Cost Benefit Analysis for the project in $(per store) Year 0 Year 1 Rate($) Qty Cost Cost 0.35 1200 70,000 15 24,500 Year 2 Cost Year 3 Cost Year 4 Cost 2,000 3,000 3,000 3,000 5,000 Year 4 Year 5 Amount Amount 5,97,197 7,16,636 36,60,250 40,26,275 1,46,410 1,61,051 3,000 5,000 1,43,410 1,56,051 Year 5 Cost

Year 0 Amount 2,88,000 25,00,000 1,00,000 1,00,000 30

18,000 4,000 15,000 3,000 3,000 3,000 64,500 3,000 3,000 Year 1 Year 2 Year 3 Amount Amount Amount 3,45,600 4,14,720 4,97,664 27,50,000 30,25,000 33,27,500 1,10,000 1,21,000 1,33,100 64,500 3,000 3,000 45,500 1,18,000 1,30,100

Percentage Increase in Footfalls 20% Conversion Ratio 50% Percentage Increase in Sales 10% Margin 4% Assumptions: 1) Total Merchandize at the store at a time= 70000 nos. 2) 15 changing rooms per store 3) Software costs, other hardware, training cost are assumed 4) 10% increase in sales per year due to RFID implementation 5) 20% increase in foot fall and Margin is constant at 4%

What-if Analysis

Working as a Team & Learning

Working as a team

Respecting different perspectives is necessary

Critical analysis of all ideas Flexibility in responsibilities

Need of integrating investment decisions with business objectives necessary Focus on business processes; technology is just an enabler


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