RAIN Alliance Research Finds RFID Growth Despite Pandemic

By Claire Swedberg

According to a report from the Alliance and VDC Research, integrated circuit sales reached 21 billion last year, while overall UHF RFID products are forecast to reach more than twice the volume of sales from 2019 to 2024.

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Sales of RAIN RFID tag and reader technologies grew in 2020, according to global research conducted by the  RAIN Alliance, with integrated circuits (ICs) topping 21 billion sold worldwide, up from about 18 billion the year prior. Meanwhile, a study released in December 2020, conducted with  VDC Research, predicted that the market for all UHF RFID products will grow from $2.2 billion in 2019 to $5.1 billion by 2024, according to Steve Halliday, the RAIN Alliance’s president.

The Alliance is a nonprofit organization dedicated to promoting RFID technology worldwide (RAIN is a brand name for passive UHF RFID). Its project, known as the  RAIN RFID Market Research Report, identifies growth in the UHF RFID market. The report focused only on UHF RFID technology that is branded as a RAIN technology. According to the report, which studied sales of tag ICs, inlays, tags, reader ICs, modules, readers and printer-encoders, RFID products represented $2.2 billion in 2019 and are forecast to exceed $5.1 billion in 2024. Tag volume is expected to grow at a compound annual growth rate of 26 percent, the report indicates, from 17.7 billion in 2019 to a conservative projection of 56.1 billion in 2024. In 2020, the study found reader shipments to number more than 262,000 units.

Steve Halliday

The RAIN Alliance has been tracking RFID tag IC sales annually throughout the past five years, Halliday explains, but this year marked a first for its sponsored report, which covers all UHF RFID technology sales, including readers and printers. VDC conducted the research through interviews of Alliance members between spring and fall of 2020. Halliday says the steady growth in ICs measured annually provides part of the picture of RFID technology trends. However, he notes, collecting data regarding all hardware would offer a more detailed picture.

Therefore, the organization began working with VDC to conduct the necessary research. It was broken into best- and worst-case scenarios, in part due to the economic uncertainty presented by the COVID-19 pandemic. The study found that RFID product sales during the past year came close to the best-case scenarios the partners had forecasted for 2020. In addition to interviews, the research included detailed analysis of market models, categorized by product type, including finished tags or transponders, fixed readers, handheld readers and printer-encoders.

The study also examined the use of RFID across multiple industries and applications, Halliday says, along with trends by industry, application and regional market. When it comes to RFID tag sales, the volume of ICs or chips that power those tags has been growing steadily. From approximately five billion ICs sold in 2015, sales numbers for 2020 were up fourfold, at more than 20 billion. Moving forward, the study indicates, growth is expected to accelerate, with the best-case scenario predicting sales of 30 billion ICs this year and 83.7 billion in 2024, and with 58 billion ICs the most conservative forecast.

“One of the things we’ve seen,” Halliday states, “is that some companies are reporting 2020 was a great year for them,” despite the economic downturn. That, in part, is due to the growth of RFID tracking of inventory in the retail industry, as well as a variety of new applications that are diversifying RFID technology use. For instance, the potential annual volume of tagged items in food was two trillion last year, only 0.03 percent of which has been tagged so far. Other potential areas for growth include the apparel and footwear sector with 80 billion items, 16 percent of which are currently tagged. Automotive parts, at 603 billion, are only tagged at 0.02 percent, while parcel tracking required 90 billion tags and, thus far, only 0.02 percent are tagged.

David Krebs

Because the study was taking place during one of the United States’ worst recessions, Halliday recalls, there was some question about how RFID technology was performing. “I was unsure what would happen because of last year,” he says. “When we got verification of tag volume, that we were tracking on the best-case scenario, that was a real surprise.” The results indicate that companies are deploying RFID despite the pandemic, and in some cases to better manage their operations during the outbreak.

For example, retailers can provide goods to consumers based on online purchases with more agility by knowing where their goods are, and by tracking their movements via RFID tag reads. However, some industries were stalled in their RFID deployments this past year due to the pandemic, including the airline sector. While baggage tracking was anticipated as being a large growth area during that period, due to requirements announced by the  International Air Transport Association, such efforts actually came to a halt as air travel dwindled.

Those losses were offset not only by retail, but by the technology’s diversification into other sectors. The healthcare and pharmaceutical industries, for instance, have numerous pilots or deployments under way, says David Krebs, a VDC Research analyst. “People are looking at ways to track pharmaceutical products,” he explains, including not only COVID-19 vaccines, but other vaccines and drugs (see  Pharma Company Releasing RFID-enabled OR Drugs).

“We can see the trends and they are all very positive,” Halliday adds. “It’s a good industry to be in now. We are in a very strong growth stage.” RFID is widely in use, he reports, whereas other technologies are competing for location and automated ID collection. “The technology is very reliable now.”

“One of the underlying themes we certainly saw in our research was the benefits RFID provides when it’s done right,” Krebs says, adding that COVID-19 greatly impacted retail. RFID, he explains, served as a tool to meet the changing needs of consumers. “RFID was closely tied to retailers’ ability to quickly pivot” to e-commerce and other retail trends. What’s more, the research found a proliferation of applications and use cases last year for passive UHF RFID.

For instance, RFID use for logistics and parcel handling has grown. There are also trials under way for tracking fast food on a case- or tray-level basis to manage the freshness of food being delivered to restaurants. While RFID applications have been in place for years, Krebs says, some deployments were stymied by the technology’s relatively high cost and technical limitation. Current technologies provide higher performance at a lower cost, he adds, which has helped to boost adoption trajectory, as has a more educated audience that knows where RFID is and is not best suited. “Sometimes, it’s just as simple as saying ‘Does it make sense for me to place a tag on this item?'”

In addition, the study shows that RFID is helping to drive automation in manufacturing and logistics, in which the technology’s presence can reduce the need for large numbers of warehouse employees at a time when social distancing is a requirement. Krebs also says he has seen shifts in reader infrastructure use. While stores have been equipping themselves with handhelds, he reports, “We are seeing a shift toward fixed reader investment that allows organizations to get more flexibility out of their systems.” Such readers include portals, overhead ceiling-mounted models and under-the-desk devices for use at the point of sale, as well as tunnel readers for distribution centers.

The research was intended to offer a reliable alternative to the large number of market research papers being sold, which Halliday says might not all be reliable. The Alliance, he notes, was motivated in part by the need to provide a well-researched, impartial study. “It was nice to have verification for the [growth] numbers we thought would be the case,” he states, and that were not necessarily what was reflected in some market research. “Some research techniques are not exactly what we would want. We think it’s a good thing that [the RAIN Alliance] steps forward and provides numbers that we can all believe.”

According to Halliday, the organization may update the results at the end of this year or in early 2022. “Certainly, there will be another major one sometime in the future,” he says, and he will be watching two areas of RFID growth going forward. One is retail food (particularly fast food) environments, in which there are already numerous pilots to manage data about fresh food products. The second area of growth is healthcare, for the purpose of pharmaceutical and consumable goods tracking.

The report is available at  the RAIN Alliance’s website at a cost of $2,750 for members, plus a $5,500 single-use version for non-members. The Alliance comprises 160 members from around the world, with membership split relatively equally between Asia, Europe and the Americas.