Aug 25, 2015Every June for the past five years, the RFID Lab has analyzed RFID adoption by U.S. retailers. While it's not a scientific study—the analysis is based on publicly available information and the lab's work with various retailers—it has provided a reliable snapshot of both new and existing adopters.
Following three years of slow adoption, the past two years have witnessed tremendous growth in both the number of retailers testing RFID and those deploying solutions. And we're seeing this among all types of retailers—from large department store chains to smaller specialty shops, though mostly in the apparel sector.
For the study, we consider whether a retailer is conducting a proof of concept (POC), pilot or deployment. A POC, which typically involves one or two stores and a limited number of merchandise categories, is designed to demonstrate RFID's effectiveness in the retailer's environment.
The next step is a pilot, which generally involves more stores and categories, to determine if the RFID application, and the resulting benefits, can scale. If the pilot is successful, retailers then move to deployment. Large department stores typically roll out RFID to the entire chain in one or more categories; over time, they add other categories. Specialty retailers tend to RFID-tag all items in one store at a time, until all stores are RFID-enabled.
The 2015 study reveals a pattern of movement expected in a healthy adoption environment. The graphic shows the stage of adoption of U.S. retailers currently investigating RFID solutions. More retailers are deploying RFID, so even though some of the percentages are similar, the total number of retailers in each category is higher this year than it was last year. In fact, new retailers adopting RFID increased a whopping 23 percent from 2014 to 2015; most are new entrants conducting POCs. Many of the retailers that conducted POCs in 2014 moved to pilots in 2015 (some are still conducting POCs). Most retailers that conducted pilots in 2014 moved to deployment in 2015 (the others are still doing pilots).
I suspect the healthy adoption rate is due in large part to the growing awareness among retailers that RFID is necessary for omnichannel retailing, a service retailers must provide to remain competitive. For the upcoming year, we expect both the number of new adopters and those deploying solutions to exceed this year's growth.
Bill Hardgrave is dean of Auburn University's Harbert College of Business and founder of the RFID Lab. He will address other RFID adoption and business case issues in this column. Send your questions to firstname.lastname@example.org. Follow him on twitter at @bhardgrave.