Avery Dennison (NYSE: AVY), a global materials science and digital identification solutions company, reveals that supply chain blind spots during packing and shipping, fueled by a lack of integration between critical systems, are quietly eroding profitability for fashion retailers. At the same time, supply chain shrink is adding to the monumental challenge retailers face in combating store theft, staff theft and returns fraud. Avery Dennison is helping brands tackle this problem with the launch of Optica™, a full-service portfolio of end-to-end supply chain solutions, driving item-level data transparency from source to retail, allowing for greater visibility and control over shrink.
Shrink is already at record levels, due to a spike in theft. Research from the National Retail Federation reports a 93% increase in the average number of shoplifting incidents per year in 2023 versus 2019 and a 90% increase in dollar loss due to shoplifting over the same time period.
Compounding this battering of fashion’s profit margins is the fact that considerable losses are also happening behind the scenes — hidden in plain sight within disconnected systems. A new report from Avery Dennison, Boosting Margins – The Power of Enhanced Fashion Supply Chain Visibility reveals that 64% of 250 fashion retailer leaders surveyed say inaccurate or incomplete shipping information is a common reason for order delays and shrink.
The failure of packing, shipping, and order management systems talking to each other was the most widely-cited post-production concern among those polled.
“As margins get tighter due to trade barriers, geopolitical tensions, and rising production costs, fashion brands can’t afford to let preventable inventory loss fly under the radar,” says Uwe Hennig, global segment senior director, General Retail, Avery Dennison. “If you don’t know what’s missing, you can’t restock it — and that’s a double loss.”
“In an industry where speed, trend responsiveness, and inventory precision are paramount, systems visibility is essential. Fashion brands that fail to bridge the digital gaps in their supply chain risk more than just stock loss — they risk missed profits and missed opportunities.”
RFID source tagging can help
RFID technology has been proven to overcome supply chain opacity and inaccuracy. Item-level RFID tags, embedded in garments or labels during production, enable real-time tracking and seamless integration across previously siloed systems.
A separate survey by Avery Dennison of 300 retail leaders, found 76% of respondents say they are already using or planning to adopt RFID. This highlights the growing urgency to improve inventory visibility for the purpose of operational efficiency and profit protection.
“Retail leaders recognize that boosting visibility and transparency in supply chains helps to reduce stock mismanagement and protect from the very real threat of theft, while strengthening partner and consumer trust,” continues Hennig.
Download The Retail Theft Crisis: Strategies to Protect Your Business report here.
