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Waiting for the Gorilla

Apparel retail and health care are close to meeting all the conditions needed for mass adoption of RFID technology.
By Mark Roberti
Aug 01, 2011— In Geoffrey Moore's seminal work on the adoption cycle of new technologies, Crossing the Chasm, he posits that several conditions must exist before a new technology enters the phase of mass adoption, which he calls the "tornado." First, the new technology must be able to solve a problem within an industry that other technologies cannot solve. Second, there must be a global standard. Third, there must be a "whole product"—that is, a complete solution that addresses all aspects of the problem. Fourth, there must be a dominant technology provider—a "gorilla," in Moore's terms. And finally, the industry must reach a critical mass of adoption that causes everyone to adopt the technology in a relatively short time span.

Surveying the world's industries, it's clear the apparel retail and health-care sectors are closest to achieving widespread adoption of RFID technology. Let's look at apparel first. The problem all apparel retailers face is that it's difficult to manage complex inventory—jeans, for example, come in several colors and styles and many sizes. Making sure the optimal number of all these different stock-keeping units is always on the sales floor is a challenge, and no other technology can solve it. (Put a check next to condition one.)

Illustration: iStockphoto
The apparel retail industry has embraced ISO 18000-6C as the standard for tracking clothing (check condition two). Companies such as Checkpoint Systems, Tagsys RFID, Truecount, Tyco Retail Solutions and Xterprise have developed hardware and software solutions that allow retailers to track apparel from the point of manufacture to the point of sale. (Condition three is met.)

And while most retailers have not publicly announced rollouts (Wal-Mart Stores and American Apparel, in the United States, and Gerry Weber International, in Europe, are among the few that have), it's generally known that Banana Republic, JCPenney, Macy's and others are deploying or seeking to deploy the technology. If these chains proceed with full rollouts, the industry will be close to achieving critical mass.

Currently, there's no gorilla in the market—one dominant provider making the whole product. Avery Dennison RFID dominates the RFID transponder business, and Motorola the handheld business. But no single software company has won enough market share to emerge as the clear leader. Once that happens, the industry will have met all the conditions necessary for mass adoption in apparel retail.
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