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Will 2012 See Widespread Adoption of RFID?

Several things must happen before the technology takes off, but the retail apparel sector is getting close to using the technology en masse.
By Mark Roberti
Feb 01, 2012— Every year for the past 10 years, prognosticators have declared: This is the year radio frequency identification will take off. While each year is marked by technology improvements and increased deployments in myriad sectors, the failure of enterprises to adopt RFID on a large scale leads to inaccurate reports about the technology's demise. So to set the record straight, we foresee 2012 as another year of progress for the industry, but RFID will not be widely adopted this year. That's because there are several things that still must happen.

1 The hardware must meet specific business needs. Over the past five years, RFID hardware has improved greatly. High-frequency systems have performed well for years. Active RFID-based real-time location systems (RTLS), which were sometimes imprecise, have improved markedly. Impinj, NXP Semiconductors and other chipmakers have developed ultrahigh- frequency chips with more functionality, and RFID vendors have used these chips to develop tags that are more efficient in retail and RF-unfriendly environments. New tags provide more accurate reads and include privacy features. Moreover, vendors have designed a myriad of specialized tags that can be used for specific purposes, such as tracking blade servers within data centers or casings in oil fields.

Illustration: iStockphoto
RFID readers have also improved in performance, but they have not evolved as rapidly as tags, in terms of new form factors for specific applications. There are essentially three types of UHF readers—fixed, handheld and mobile, which can be affixed to carts or forklifts. These work well for many applications, but there are some capabilities or form factors end users want that either don't exist or are available only from a single vendor. Some want smaller, lighter handhelds, handhelds with GPS or handhelds that are intrinsically safe (a requirement on oil rigs and in other environments where flammable materials are common).

2 The software also must meet end-user needs. Today, several companies offer robust solutions for the retail sector, but most software providers offer generic asset-tracking packages. While these packages can be tailored to track IT assets, tools in manufacturing facilities or returnable transport items, end users don't want to do a lot of customization, because it creates risk. Software providers need to tailor applications to do most or all of what an end user wants them to do.

3 The technology must reach critical mass among end users in a single industry. The industry closest to achieving critical mass is retail apparel. JCPenney, Macy's and Wal-Mart are all using RFID to track individual clothing items. Those three retailers sell billions of dollars' worth of apparel annually. Midsize chains in the United States, Europe and Latin America— including American Apparel, Banana Republic, Charles Vögele, Gerry Weber International and Liverpool—also are adopting RFID for apparel tracking. Once more retailers adopt and the industry reaches critical mass, all retailers will adopt RFID for apparel tracking because there will be less risk—the early adopters will have proved the technology is mature—and they will need to adopt to remain competitive.
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