RFID Entering New Phase

Discussion
Feb 28, 2008

By George Anderson

Companies involved in supplying radio frequency identification technology are on the verge of substantial revenue increases, according to a study by Gartner Research.

Worldwide revenues for RFID are projected to reach $1.2 billion this year, a 30.9 percent increase over 2007. Gartner forecasts revenues reaching $3.5 billion by 2012.

Retail (14 percent of the market) ranks fourth among industries globally that are using RFID. The top segment is discrete manufacturing (21 percent) followed by national and international government (20 percent) and transportation (20 percent).

“The market for RFID technologies has begun to transition from being compliance-oriented to being revenue-generating and innovative,” said Chad Eschinger, research director at Gartner, in a press release.

“Much of the initial adoption of RFID was driven by mandates from the U.S. Department of Defense (DOD) and Wal-Mart where compliance with a retailer directive rather than business competitiveness was often the underlying driver,” Mr. Eschinger said. “Early adopters faced tight profit margins and pressed technology providers for lower hardware costs. Fortunately for the market, this trend has waned and innovation rather than cost is becoming a key driver for adoption.”

According to Gartner, there are a number of key trends behind this new phase in RFID technology’s progression including a growing interest in asset management and a growing focus on in-store inventory management rather than broader supply chain management.

Today, companies are increasingly focused on RFID’s ability to help advance their competitive position. Globalization is also a factor as businesses seek to use the technology to speed the time to market for products.

For many, however, financial realities still require a take-it-slow approach to RFID adoption.

“Today’s buyer is more discriminating than in the past and cautious of over-hyped technologies,” said Mr. Eschinger. “They will be looking for greater functionality and return on investment.”

One of the factors that has impeded wider adoption of RFID, according to Gartner, is the lack of a provider offering end-to-end solutions. The research firm is looking for this situation to change as the industry begins to consolidate.

Discussion Question: Do you see radio frequency identification (RFID) entering a new phase of development in retailing and related businesses? At this point, where do you see the greatest practical use of the technology?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

7 Comments on "RFID Entering New Phase"


Sort by:   newest | oldest | most voted
Ryan Mathews
Guest
14 years 2 months ago

The greatest practical use remains in those cases where a shipping unit and the number of items in that unit equal one as in tanks, refrigerators, televisions, etc. People are still going to push to make RFID viable at retail, but clearly it’s not going to be quite as easy (or cost effective) as its original proponents argued.

Ron Margulis
Guest
14 years 2 months ago

RFID in retail has been an evolution, rather than the revolution many early evangelists were expecting. There are many reasons for this, including market conditions, technology lapses and problems with standards. All along, however, the business case for RFID has been solid at the supply chain level. Tracking the movement of trucks, unit loads and cases of product that cost hundreds and thousands of dollars makes sense.

Knowing exactly when a shipment of promoted items will arrive at the store to fill in an out-of-stock position, or exactly which locations received potentially spoiled perishables, can be critically important to a retailer. Tracking an individual 25-cent pack of gum through the supply chain, not so much.

Herb Sorensen, Ph.D.
Guest
14 years 2 months ago

Mostly, appropriately, this is focusing on RFID as a supply chain management tool. However, tracking shoppers by putting the technology on their carts has already been tested by MediaCart, and others are close behind.

Of course their are other technologies for tracking shoppers, but the passive RFID, reading shelf tags and ultimately product tags, will mesh tightly with the supply chain management in the back room. This in turn will change the trickle of behavioral data coming from the sales floor to a veritable flood. So the evolution continues.

Mark Lilien
Guest
14 years 2 months ago

Maybe there’s no end-to-end RFID solution provider because if most folks knew the end-to-end cost in advance, their enthusiasm for RFID would be minimal. There’s a good reason retail adoption has been slow: the return on investment for most retailers would be suboptimal compared to proven alternatives in use for many years. If bar codes and better manual procedures get you 90% of the distance at 10% of the cost, why bother with RFID?

Need to move the backroom stock out to the shelves faster? Instead of RFID, why not use closed circuit TV and improve your workload scheduling? Not sure that everyone built the display on time? Either look at your cctv screen via the internet or have them e-mail a photo of the display when it’s built. Want to know when the truck arrived? Put a bar code on the bill of lading and scan it at the loading dock.

Susan Rider
Guest
Susan Rider
14 years 2 months ago
RFID is slowly being adapted. Of course, the suppliers to Sam’s Club are rushing to meet the RFID mandate recently put out by them. The University of Arkansas has a great lab for retailers to view RFID in use through out the supply chain. Is it enough for everyone to jump on the band wagon? I don’t think so. There has to be a value over and above the traditional bar code. A retailer can still identify a product, case pallet and truck by a bar code. If that is the only thing they are trying to accomplish then bar codes work. RFID is a bar code on steroids enabling reads through doorways or tunnels…not totally perfected at this point, though. I was giving educational speeches about RFID in 2003 all across the country when everyone thought it would be the next Y2K. The practical point is that it costs money to retrofit your supply chain for RFID. The technology still needs advancement and applications are still being identified. Therefore, what is the gain? Large… Read more »
Mike Spindler
Guest
Mike Spindler
14 years 2 months ago

The business case for the benefits brought about by RFID, or technology that can mimic/improve on those benefits has been in place for years.

RFID will find its place, but has proven–as have so many other technologies–that they are not the “silver bullet” solution to all of the demand chain/supply chain, shelf inefficiency issues that exist.

One of the real benefits of RFID, and of CCTV for that matter, is that they have spawned a great deal of research to find solutions that overcome the myriad of problems that RFID/CCTV face in the reality of day to day retail including the costs.

Some of that research is about to bear fruit with both more practical, and much more utilitarian solutions. Still expensive yes, but at prices 1/10th the cost of an RFID implementation.

Bill James
Guest
Bill James
13 years 7 months ago
One of the many critical factors in adoption of any technology is how does it change the game for the players involved. RFID is a game changing technology particularly as you move it closer to the shelf and display where data capture today is virtually nil. The large CPGs of the world spend millions of dollars on trade promotion and execution and have no real visibility into the execution side of their marketing initiatives. They lack actionable intelligence with which to base millions of dollars of decisions on. As such they are flying blind when it comes to in-store execution and sometimes pay dearly for it. RFID at the item level in the shelf and on the display fixture is a game changing technology. Having access to data in a real time format, the CPG and retailer can collaborate more effectively and efficiently on in-store execution. And with the data streams coming out from the point of consumer decision (Did they buy the promotion item or not?) the CPG can start to build a reliable… Read more »
wpDiscuz

Take Our Instant Poll

How much of a factor is the lack of providers offering end-to-end RFID solutions in the deployment of the technology in retailing?

View Results

Loading ... Loading ...