RFID’s Tipping Point

By Mark Roberti

Have we reached or passed it—or has adoption not yet arrived at that magical moment when all businesses want to use the technology?

I was speaking to a venture capitalist last week who was considering investing in companies that sell radio frequency identification technologies. He seemed convinced that RFID had reach the tipping point and was clearly on its way to mass adoption. I'm not so sure.

Where we are in the technology adoption life cycle might depend, to some extent, on your definition of "tipping point." Malcolm Gladwell, in his book The Tipping Point, describes it as "that magic moment when an idea, trend or social behavior crosses a threshold, tips and spreads like wildfire."

Is RFID spreading like wildfire? I don't see it. Increased coverage of the technology in the mainstream media and Impinj's recent IPO may give the impression that RFID is nearing the tipping point (see Impinj's History-Making IPO). What I see is a technology that is beginning to build critical mass in retail. At some point, enough retailers will have put RFID in stores that suppliers will decide they might as well tag all of their clothing. At that point, other retailers will quickly follow suit, and RFID will spread rapidly through the rest of the retail sector.

I would estimate that less than 1 percent of apparel items globally are tagged. While we are certainly seeing healthy growth, from 1 billion passive ultrahigh-frequency (UHF) tags annually in 2010 to 5 billion annually today, that pales in comparison to how RFID will grow when the technology hits the tipping point in retail and 95 percent of all apparel items are tagged. At that point, we will see tag volumes grow from 5 billion to 10 billion to 50 billion in the space of just a year or two.

How long will this take? It's difficult to say. We are seeing steady growth and more and more retailers are adopting the technology, but it takes time to install infrastructure in stores and to have suppliers put tags on goods. Most retailers begin RFID-tagging a couple of categories and then expand to additional categories. So it will take time to reach the point at which big apparel suppliers decide to tag everything.

It's possible, of course, that a new type of reader emerges that is less expensive and easier to deploy, and that delivers a level of inventory accuracy that makes it extremely compelling for retailers to begin using RFID in all departments. That could dramatically accelerate adoption.

I don't think we'll hit the tipping point this year or next. But it is not far off, and retailers that are watching and waiting might be taken by surprise when adoption really takes off.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.