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RFID Market for Retailers Forecast to Grow 39% Annually

In a new report, Frost & Sullivan predicts that yearly RFID revenue will reach $5.4 billion in 2020, due to increased omnichannel sales fueled by better understanding of the technology by retailers, more online purchases, and the increased tagging of goods by product manufacturers.
By Claire Swedberg

With the use of RFID technology, retailers are improving their visibility into supply chain and in-store inventory counts, Ravi explains, and are thus preventing out-of-stock incidents in which a consumer may have to wait for a product because none was available in his or her regional area. Therefore, RFID provides a return on investment for retailers by helping them to meet consumers' demands for product delivered fast.

The Frost & Sullivan study consisted of analysis of sales data regarding readers, printers, tags, software, and full turnkey solutions and services. "Tags constitute a major share of the market," Ravi states.

As RFID use ramps up, Ravi expects hardware vendors to compete to improve tag, reader and printer effectiveness. Better-performing hardware with the ability to read, write and print RFID labels faster and without errors, he says, is likely to result.

RFID technology providers will focus more on one-stop-shop solutions that will enable an end user to acquire an entire system from a single provider, Ravi predicts, instead of having to procure parts of its solution from multiple vendors. However, RFID technology providers must better understand the retail market.

"From a system integration standpoint," Ravi says, "they need to know more about retailer processes to provide solutions that are effective."

An early challenge to adoption has been concerns from privacy groups, particularly in Europe—as well as in North America, to a lesser degree—about security and privacy breeches that could result from the purchase of an RFID-tagged item. As consumers become more accustomed to RFID use in stores, and as they find no specific privacy concerns, Ravi predicts that such privacy concerns will become negligible. For instance, tags can be removed at the point of sale before a customer takes a product out of a store; the tags can then be disabled, and each tag's ID number can be encrypted as well, in order to provide a greater level of security.

Frost & Sullivan also conducts research regarding RFID growth in other vertical markets, Ravi says, such as manufacturing, logistics, oil and gas, and automotive. He adds, however, that retail seems to be the sector with the most growth at this time.

A full version of the "Analysis of the Global RFID Market in Retail" report can be purchased at Frost & Sullivan for $6,000, by contacting Julia Nikishkina, the company's corporate communications manager in Europe.

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