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SML Analysis Finds Just 4 to 8 Percent Adoption of RFID Among Retailers

The study finds that pilots are evolving to full deployments, the company reports, indicating a steady growth of RFID adoption ahead for retailers, fueled by omnichannel sales.
By Claire Swedberg
Apr 04, 2017

According to RFID solutions provider SML RFID, the apparel market is still in the earliest steps of a long race toward universal RFID tag use. In fact, the company estimates, apparel market penetration is a conservative 4 to 8 percent thus far. This is considerably less than indicated on some reports, such as one from GS1, which estimate the adoption percentage at more than half.

SML's growth estimate comes from an analysis that the company initially conducted 18 months ago, says Dean Frew, SML RFID's CTO and senior VP of RFID solutions. The analysis, he says, was intended to help the company identify where it should focus its marketing strategies and planning, such as the geographic location of service bureaus that can quickly provide encoded tags, and what business requirements were emerging across different segments.

Dean Frew
The intent to deploy RFID, or the testing of the technology, is significantly different than an actual permanent deployment, Frew says, but in some cases, statistical results can be confusing. For instance, if a large company were to conduct a pilot at a single store, that would indicate its interest in RFID, even if the sheer volume of tagged items were low.

What that means for the RFID industry, Frew explains, is plenty of room for growth—something he says the company's sales are proving. According to Frew, SML's RFID technology sales have been up 50 percent annually for the past three or four years. "We're seeing significant growth year over year, and it looks like 2017 and going forward is going to be no different than that."

Much of that growth results 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 or online, or purchase that item online and pick it up at the nearest store. This omnichannel model requires that every store maintain a highly accurate inventory count.

However, Frew adds, at the expected growth rate, it may be a decade before RFID installations—including software, tags and readers in use at apparel stores—become ubiquitous. "When you define adoption," he states, "we're looking at it from the bottom up." That means counting the number of actual RFID tags in use, and the number of stores using the technology.

The number of actual deployed RFID systems—including tags, readers and supporting software—for which retailers are experiencing measurable results and a return on investment (ROI) is considerably less than some estimates have led the industry to believe.

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