Report: 115 Billion UHF RAIN RFID Tag Chips Ahead

Published: June 5, 2024
  • The latest report from the RAIN Alliance and VDC Research sees 20 percent annual growth in the industry ahead, driven by diversification of products and industries that demand the technology.
  • Not stopping there, the organizations see opportunity to sell trillions of RAIN RFID tags in the future, each year.

UHF RAIN RFID chip volume is rising at a rate of 20.4 percent annually, with a momentum that will bring the industry to 115 billion shipped tag chips in 2028. That’s according to a new research report “Global Markets and Applications for RAIN RFID Solutions,” conducted by VDC Research Group for the RAIN Alliance.

Additionally, the value of RFID inlays (in which the chips are built) will grow from $1.6 billion last year, to $3 billion in 2028.

Already the industry has been enjoying a brisk growth in volume with 45.5 billion tag chips shipped in 2023, up from 20 billion just three years ago.

Diversification of RAIN RFID Deployments

The report finds growth is being driven by the continued diversification of RFID usage and adoption across a growing number of industries and use cases, said Aileen Ryan, RAIN Alliance president and CEO.

That means RFID tags are being applied to a wider set of product categories within retail, as well as being adopted in greater quantities in other industries such as manufacturing, automative, pharmaceuticals and healthcare. One area of growth that has stood out is tire tagging, expected to average about 2 billion tagged units per year.

Within retail, some of the diversification is being driven by mandates from retailers requiring that merchandise like home goods, electronics, sporting goods and other consumer items be tagged.

Applications are expanding as well. RFID use at exit points of stores is gaining traction for loss detection and inventory management, said Ryan. Point of sale and self-checkout counters are increasingly being integrated with RFID readers.

Sustainability Expected to Drive More Growth

Much of the growth is being driven by a need to meet corporate sustainability goals, such as reducing carbon footprint based on supply-chain based emissions, redundant inventory and other inefficiencies.

“Sustainability remains a key catalyst for RAIN RFID adoption and investment growth in the past year,” said Ryan, and she predicts that it will continue to grow in significance for the RFID industry and its customers. She pointed to use cases such as driving efficiency across the supply chain and using RAIN RFID to better anticipate and manage stock levels to reduce waste.

Organizations are increasingly considering future use cases for tagging items to support circular economy developments such as the EU’s Digital Product Passport (DPP) mandate, “with tags providing vital information throughout a product’s lifecycle to inform how it is used, reused and dealt with at end-of-life,” Ryan said.

David Krebs, VDC Research’s EVP of mobility and automatic identification and data capture (AIDC), added that, “one of the things that we certainly found is that retailers and brand owners that are tagging their merchandise with RFID are operating at a level of efficiency that others are not.”

That efficiency not only manifests itself in improved stock levels—by reducing excess inventory that often turns into waste— but in speed of the supply chain. For many companies, there is both financial benefit as well as sustainability gains that may be occurring even without close collaboration with the company’s sustainability leadership.

Embedding Tags in Products

Another emerging trend that the research points to, is greater adoption of embedded tags over the next five years.

Today, most UHF RAIN RFID tags are pressure-sensitive labels applied directly onto the product or hang tags such as paper price labels. However, if RFID tags are embedded in a product, they enable lifecycle identification, even after the product is sold and discarded or recycled. That could result enable circular economy management and other initiatives.

The transition is already taking place as companies begin exploring integrating RFID in their products.

“We’re starting to see the evolution of truly embedded technology,” Krebs said. He offered an example: a global clothing supplier may find it’s no longer worth the cost of attaching RFID tags only to products destined to retailers that require RFID, or to the European Union due to its DPP mandate.

Instead, said Krebs, a manufacturer of such products “might rework their manufacturing process so that they can just embed tags into everything.”

Applications Beyond Retail are Growing

Currently, about half of the RFID industry’s revenues come from sales to the retail sector, while RFID technology adoption in the logistics category is growing rapidly in the healthcare and pharmaceutical sectors, Ryan said.

Last year, when the retail industry experienced a dip in apparel sales, it didn’t significantly impact the RFID industry as a whole because it was offset by demand across other merchandise categories, Krebs said.

“We’ve reached the level of diversification such that even with softness in apparel in the second-half of last year the industry overall still had a growth year,” he said.

The alliance and VDC are quick to point out that despite the relatively large numbers of tagged items, there’s room for considerable growth.

Seeking Numbers in the Trillions

“Any number that ends with two zeros is always regarded some milestone,” Ryan added, “I want us as a community to think 10X [that number].” That could mean, for instance, 450 billion chips (ten times the number shipped last year) or eventually trillions of things being tagged.

To put the existing RFID chip volume numbers in perspective, the most mature RFID adoption category— apparel tagging—has not come near its capacity yet. Krebs pointed out that currently RFID has penetrated about 20 percent of apparel products.

That much growth may still be further down the road. “We won’t reach trillions [of tags] in the next couple of years,” Krebs said. “I think that significant development will take place over the course of time. And while not overnight, I think that is an inexorable trend.”

Much of the growth is fueled by standards and mandates, coming from industry, government regulatory bodies or simply a brand’s customers.

RFID is benefiting from the growth in AI technology that enables companies to further leverage the data they’re collecting as well. For instance, RFID tag reads could generate the data needed to forecast consumer demand and plan inventory as well as reduce waste and avoid price markdowns.

A Report Unique to the RAIN RFID Industry

The VDC and RAIN Alliance study may be the only such research report that’s entirely focused on UHF RAIN RFID, with Krebs  observing that “there’s more than enough research out there on RFID as a technology but it’s always been very broad in its analysis,” which may include everything from low frequency (LF) to high frequency, (HF) or near field communication (NFC).

For that reason, “there was a desire to have something as a standalone piece of research validated thorough primary research methodology that the industry could point to,” he said.

The report relies on a combination of data points, including a survey of about 450 respondents, other direct primary research and VDC’s ongoing secondary research of the industry, Krebs said. The report spans the entirety of RAIN RFID products from tags and readers to printer and encoders to label converters.

The full report is available for sale at the RAIN Alliance website.

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