August 30th, 2017

How fast are Retailers adopting RFID?

Originally on A1 Retail

18 months ago, we conducted a deep analysis of the industry to look at where to focus our own business strategies. While dissecting public information and mentions of units sold among apparel and footwear retailers (with at least 40 stores located in the U.S. and Europe). Following this research, we noticed that whilst tag growth was growing steadily, the number of stores actually adopting RFID was still relatively low.

In our bottoms-up market analysis (retailers and brand owners with more than 40 stores) we estimate that the total annual market for tags is between 35 and 37 billion tags and that there are approximately 200,000 stores in that same apparel and footwear market.   Thus, we estimate the market penetration in US and Europe to be around 8 percent at the end of 2016.

So what does this mean for the industry? Looking ahead, dramatic growth is almost assured and there is a huge opportunity for vendors and retailers. Much of that growth and opportunity will result from the pressure of online sales that is prompting retailers to offer omnichannel purchasing for customers who can buy a product from the nearest store, online, or purchase online and pick up the product at the nearest store the same day. To have an effective omnichannel model requires a highly accurate inventory count in each store and remains one of the biggest driving forces behind RFID adoption.

However, whilst the opportunity for retailers to adopt RFID is significant, there are also a number of factors that have contributed to a slower uptake of RFID amongst retailers.

A number of the first generation RFID deployment were shaky. Early adopters of the technology were in some cases surprised at the cost of the installation when compared against the early benefits. In these cases, the long-term benefits were often out-weighed by the immediate costs. Technology adoption was also hampered in some cases by an inability for companies to align behind its deployment and integration with enterprise data.

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