This article was originally published by RFID Update.
December 20, 2007—#3 — METRO Moves Ahead
This year left no doubt that RFID technology will have a home in METRO Group’s stores and supply chain for years to come. The German retail group, which operates 2,400 department stores, electronics stores, supermarkets, and convenience stores in 31 countries, was already an RFID adoption leader but in 2007 expanded activities to include more locations, applications, and technologies. Each announced project is interesting in its own right, and taken together METRO’s moves represent a significant investment in RFID.
“From an industry viewpoint, METRO’s progress serves as a promising indication that despite numerous mandate-related disappointments over the past several years, mandates are still moving ahead,” financial analyst firm Raymond James wrote in a report.
METRO’s 2007 efforts were impressive in their innovation and scale. The company implemented an RFID system for tracking garments that uses item-level tagging to provide complete product visibility from the distribution center to the checkout, with back-room readers, smart shelves, and smart mirrors providing information and security protection at points in between. The RFID system also drives a variety of merchandising and inventory management applications.
While METRO was innovating on the store floor, it was also expanding its supply chain RFID activities, including outfitting an additional 200 locations with reader systems and extending shipment tagging requirements to more than 600 of its suppliers.
METRO’s systems are also notable because they make extensive use of EPCglobal standards for RFID data management and integration, including EPCIS, ALE, and LLRP. While EPCglobal’s Gen2 standard has been widely adopted, the rest of the EPCglobal standards ecosystem has not yet. METRO’s RFID infrastructure will provide a valuable reference for how these protocols perform in real-world operations.
METRO, which is the world’s third-largest retailer, has gone to production with applications and technologies that most other retailers haven’t even piloted. RFID has made a positive impact on its operations, which in turn could impact retail systems in Europe and beyond.
Related articles:
- METRO Moves RFID Pilot to Production, Taps Reva
- METRO Unveils Warehouse-to-Checkout RFID System
- Why METRO’s Item-Level RFID Deployment Matters
- Investor Analysis of Intermec RFID Deal with METRO
- METRO to Penalize RFID Non-compliance
#2 — Strong European Innovation & Adoption
Perhaps there is already a “METRO effect” in the market — Europe was a hotbed of RFID innovation in retail and other segments in 2007. Besides METRO, European retailers and fashion firms Karstadt, Lemmi Fashions, Marks & Spencer, and NP Collection deployed item-level merchandise tagging applications. European innovation extended well beyond retail, as item-level tagging was used to monitor flower growing in the Netherlands and to streamline pharmaceutical distribution in Spain. Airbus moved forward with plans to deploy RFID up and down its value chain, and Sony improved security by integrating RFID tags with closed-circuit TV cameras to monitor inventory.
Related coverage:
- Finnish Retailer Gets Quick ROI on Item-Level RFID
- Germany Sees Another Item-Level Apparel Program
- Kids Clothes Firm Outgrows HF, Puts on Gen2 RFID
- RFID Blooms for Dutch Flower Tracking
- Med Distributor Converts to Gen2 RFID for Item Tracking
- Airbus Taps ODIN, Signals Aerospace RFID Adoption
- Sony Europe Finds ROI with RFID Deployment
#1 — Cautious Optimism Emerges
International business news in 2007 was dominated by inconsistent economies, fear of recession, and huge collapses in the mortgage and hedge fund industries. Yet RFID industry developments were mostly positive in 2007, which at times seemed to be overlooked against the backdrop of negative news. While there are no recent overall RFID market forecasts to validate growing optimism, numerous signs emerged — especially toward the end of the year — that RFID adoption is picking up considerably along with confidence in the technology.
RFID companies have received more than $219 million in private equity investment in just the last six months, including approximately $59 million in investments announced so far this month alone. In October respected industry analyst firm Baird issued a generally positive outlook for the industry, suggesting that market sluggishness could be finally ending. “Industry contacts suggest meaningful business opportunities are finally emerging in the RFID market,” read the report. “We are careful not to suggest that the much anticipated ‘hockey stick’ is apparent, but we are optimistic based on the level of sales and ordering activity in the industry.”
Market research firm VDC predicted the printer/encoder category would undergo 60 percent compound annual growth through 2011. Printer/encoders are an important bellwether for RFID adoption, because they are used across many industries and applications. However printer/encoders are not typically used as part of active RFID or RTLS systems, which were consistently cited as having the most momentum of any RFID category this year.
Mandate and supply chain programs were generally considered to be slow or disappointing in 2007, but sales of Gen2 hardware products — staples of these programs — doubled in 2007 compared to 2006, and are projected to grow another 75 to 100 percent next year, according to the Baird report.
A report by IDTechEx identified China as the world’s largest national RFID market, and a subsequent report by Analysys said sales in China were growing 23 percent quarterly. This article has already chronicled the rise of RFID in European retailing. Other segments and applications that have received positive assessments include airlines, asset management, file tracking, yard management, work-in-process tracking, and near-field communication (NFC) technology.
These positive developments don’t mean the industry is poised for explosive growth in 2008, only that momentum is building in several leading segments. Throughout RFID’s history, expectations have exceeded implementations. It appears both will be running high in 2008.
What do you think were the most important developments and stories of 2007? Please email your thoughts to [email protected]. We’ll use the input to guide future coverage.
Related coverage:
- Baird Sees a Turning Tide in the RFID Market
- RFID & RTLS Sees $433M Invested Over Last 18 Months
- Outlook Strong for RFID Printers, Bucking Doubts
- Analyst on the Growing Market for WiFi-based RTLS
- Research: RFID in China Growing 23% Quarterly
- IDTechEx: China is Largest RFID Market in 2007
- Motorola on Aviation Adoption of RFID