The End of an Era: American Apparel Finally Anti-Theft Tags Its Clothes

American Apparel is changing its way of doing business. The troubled hipster clothier — so renowned as a soft touch for shoplifters that Shoplifting From American Apparel is a novel that exists — is cutting perhaps the last tie to its earlier, looser, corporate culture. It is installing radio-frequency ID tags on all of its clothing, so it can be tracked to prevent theft.

As a Boston alt weekly reported in 2010, American Apparel has long been known for its popularity among shoplifters — including many employees — and for the casual attitude towards same at the corporate level.

The company's worst-kept secret is a combination of lax security and corrupt management that virtually encourages them to steal, a combination that's led to employees at multiple retail locations in the United States, individually and in teams, stealing countless thousands of dollars in merchandise from the company.

As reporter Devon Maloney pointed out, "The first green light for theft is poor management." When you engage in the fastest retail rollout in American history, expanding like jersey lamé kudzu across the world, and when you staff your stores with 17-year-olds hired not for their experience or résumés but for their looks (and for having chain founder Dov Charney's favorite kind of eyebrow), and when you give those people the keys to the store, it doesn't exactly send the message that you take leadership, merchandising, sales, customer service — or any of the things that make retail jobs work — all that seriously. It also gives those folks (retail drones who earn a fraction of American Apparel's much-vaunted $12-$14 wages for its factory workers) an engraved invitation to steal.

Our own Moe Tkacik has reported that the toleration of theft, both employee and customer, was an attitude that had its origins in the very top of the company. Charney

would defend himself against accusations that not putting sensors on the clothing was attracting shoplifters by defending the practice of shoplifting as a sort of pureness of intent: if someone was particularly good at it, that meant they prioritized "looking hot in a coveted item" over "possible legal ramifications" and thus deserved to be wearing American Apparel. (No really, he said this on a conference call.)

Oh, 2007. When credit was easy and shoplifting made your store look cool. American Apparel later got sensors, but in that corporate culture, the gesture was somewhat empty; employees were responsible for putting the sensors on newly delivered clothes, and they could easily hide un-tagged stock (the company's internal controls over shipping and delivery schedules were so poor that the missing items apparently often went unnoticed). When the company trialled RFID tags — which track individual garments from the factory floor, through shipping, through store delivery, through merchandizing on the sales floor, and up to their sale to customers — in a pilot program, it found that stock "shrinkage" topped 20%. That's more than twice the national average for retail.

RFID tags seem to work. At the stores involved in the pilot, shrinkage dropped by an average of 55%. The company also says that the technology — which allows for much more accurate stock-keeping, and therefore theoretically better customer service for anyone looking for a garment in a different size or color — has led to a "sustainable sales lift" in stores that are already using it.

American Apparel's RFID sensors will roll out to all 280 stores worldwide, making it reportedly the second-largest RFID network of any retailer worldwide. The biggest? That belongs to Wal-Mart.

American Apparel Adopting RFID At Every Store [RFID Journal]