Jul 10, 2018The adoption of radio frequency identification technology in retail is growing about 30 percent a year, but SML, a global retail technology company, reports that its sales are increasing even faster. The company says it sold 1.4 billion encoded RFID tags in 2017 and that its technology -- in the form of labels, software solutions or both -- is in use in 95 percent of the world’s retail RFID deployments.
The company’s sales are outpacing the average adoption rate, due in large part to its Clarity Software solution, says Dean Frew, SML’s CTO and RFID solutions senior VP. In the past year, he says, the company did two large rollouts with vertically integrated retailer customers – companies that sell their own products -- which helped fuel SML’s end-to-end solution growth rate. He says both companies who sell their own brands in the U.S. and Europe have asked not to be named.
Currently there are about 35 billion non-RFID-enabled hangtags sold annually for the retail market in Europe and North America, and these are in use in about 200,000 stores, Frew says. About five percent of those stores have RFID systems installed today.
Industrywide, the RFID deployments underway represent about 10 percent of all retail products that could eventually be tagged. Frew estimates that 85 percent of goods may be tagged with RFID-enabled labels in the next decade.
With all that growth, the bottom line for RFID technology companies, says Frew, is that “we have to be agile.” In fact, it’s the company’s agility that he attributes much of its strength in sales to. The company accomplishes this, he says, with a large network of service bureaus -- where tags can be printed and encoded for manufacturers. It has set up 20 service bureaus around the world, from Asia to Europe and the Americas, so that it can provide high-quality encoded tags to garment manufacturers within a few days after an order is placed.
That number of service bureaus has doubled in the past three years. And the company expects to grow that number further. SML has designed a service bureau model aimed at launching encoding and printing functionality for nearby customers within two to three months, he says.
“We follow where the customers are, and where they are going,” Frew says, and that’s important since retailers are opening new manufacturing sites in an effort to meet the demands of today’s shoppers. As shoppers demand fast access to products such as apparel, retailers and brands are responding by moving production areas or simply opening new ones to enable fast production.
Additionally, they are increasingly depending on RFID technology to ensure a highly visible supply chain to ensure the inventory levels can meet customer demands. For both those reasons, retailers and brands are launching RFID tagging processes in new sites – both established manufacturing sites, as well as new sites around the world.
“We’re continuing to see retailers looking for more places around the world to manufacture their products, and do so with reduced cycle times,” Frew says.
The ability to quickly open new service bureaus comes from SML’s proprietary encoding and data management systems that are easy to deploy, Frew says. “We have our own proprietary high-speed encoding system on a cell model,” he says. The company can install one or multiple cells of encoding machines and related software to get the system up and running for encoding of high volumes of labels.
The company attributes its own growth in RFID sales to the high quality of its inlays as well, Frew says, in addition to offering a broad spectrum of inlay and label form factors from hangtags or adhesive labels to integrated price tickets and sewn-in labels.
Frew predicts that the rate of growth for the industry and for SML will continue at a steady pace over the next three years. “We’re going to see significant growth year over year.” He says, “I think we’ll be looking back in 2020 and we’ll see that more retailers have begun saying ‘I must have [item-level RFID] to remain competitive’.”
In the meantime, SML says it has more technology offerings in the works, although Frew declined to provide specifics yet.
