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ABI Research: Two Big Problems with Retail RFID Adoption

Two disconcerting conclusions regarding retailer adoption of RFID were recently found by research firm ABI Research.
Tags: Retail
Mar 16, 2005This article was originally published by RFID Update.

March 16, 2005—Two disconcerting conclusions regarding retailer adoption of RFID were recently found by research firm ABI Research and published in the report "RFID in Retail: ABI Research Identifies a Frustrating Disconnection." The first is that RFID companies do not fully understand the business and challenges of retailing and, conversely, retailers don't fully understand RFID technology. With the exception of highly publicized initiatives by Wal-Mart, Target, and the like, this "frustrating disconnection" is hindering healthy and rapid adoption of RFID throughout the retail space.

The second conclusion has to do with retailers' solution to their RFID shortcomings: they outsource the work to technology consulting companies. Here the problem is that the big, top-name consulting companies that are usually tapped for the job are characteristically conservative with new technology. At this early stage in the game, RFID remains an early-adopter technology, and an innovative, experimental approach is preferred. Thus, the report argues that smaller, creative consulting firms are a better option, as they are more likely to offer the out-of-the-box thinking that successful RFID deployments require. Their obvious drawback is their small size; many such niche RFID outfits would be overwhelmed by the scope of reengineering a retailer's supply chain around RFID.

ABI's finding are all the more disconcerting given that it has been more than six months since the very same research company observed that the big consulting houses were moving aggressively into RFID, aiming to build expertise and capture supply chain business. The implication is that either these consulting giants have pulled back somewhat and decided to wait for the technology to mature further, or they have indeed moved ahead with their plans but are meeting the needs of retailers inadequately. Neither possibility bodes well for retail adoption of RFID.

The report's press release
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