RFID On Track

Skokie, Ill. -- According to a recent article in RFID Journal, several specialized areas represent opportunity for RFID, even though growth of RFID technology from its previous double-digit pace has slowed because of the decline in capital spending by businesses. These include apparel, especially upscale fashion, and inventory control, an area where RFID can not only improve accuracy but can also reduce costs overall. Contactless payment cards, especially those used to charge items valued at under $25, also represent an area of potential rapid growth. A report by ABI Research, an Oyster Bay, Long Island, N.Y.-based market research firm, also suggests that RFID markets are not contracting in spite of the weakened state of the world economy. "At worst, they are growing at a slower rate," says Michael Liard, ABI Research RFID Practice director. "Positive signs are beginning to appear and forecasts suggest that even including the deeply depressed automotive sector, the market should grow by about 11% between 2009 and 2010. Remove the deeply depressed automotive immobilization system numbers, which are directly tied to vehicle production, and the growth rate jumps to almost 1%."One of the reasons for slow growth is the fact that Walmart, which precipitated the initial rapid growth of RFID, has not yet implemented it across all of its stores. "In many locations, the technology has not yet been implemented because of a lack of supplier enthusiasm," says RFID Journal's Mark Roberti. "This cuts both ways, however, because one of the reasons why suppliers are not more enthusiastic is that they don't want to incur the extra expense of adding RFID tags to merchandise being shipped to stores where they won't be read."Lack of clear communication is another reason for slow growth. "Suppliers and retailers have never really agreed on exactly what data they will share," says Liard. "Even when they have agreed to share, there is no penalty for non-compliance."Another reason is that while RFID tags are cost effective on more expensive items, such as small appliances and apparel, for example, they are still too costly for use on less expensive items. "This is one of the reasons why Walmart is shifting its emphasis to its Sam's Club stores, where more merchandise is bought in bulk and multi-pack containers that can be tagged," says Roberti. "If this is successful, it should encourage use by other warehouse stores such as Costco and BJ's Wholesale Club."Apparel & Inventory ControlAccording to a study conducted by Bill Hardgrave, director of the University of Arkansas' RFID Research Center, use of RFID for item-level apparel tracking can not only improve inventory accuracy, reduce shrinkage and increase sales, but can also eliminate the need for the disruptive, expensive and time-consuming annual or semiannual inventory check most retailers conduct to improve inventory accuracy and to generate data for reporting to accountants or the IRS. The study, which was conducted at three Dillard's stores and involved more than 1,000 pairs of men's jeans labeled with EPC Gen 2 RFID tags, was released in April of this year. The results will be presented at the RFID in Fashion Conference, held in New York in August. RFID in Fashion will also feature objective case studies presented by apparel, footwear and accessory retailers and suppliers that have deployed RFID in their operations to:Improve in-store inventory accuracy from 65% to 98%,Reduce the time needed to receive goods into inventory by 85%,Lower labor costs associated with markdowns by 50%, andIncrease sales by as much as 15%.Seeonic Inc., Minneapolis, created a special self-contained wireless RFID system that does not need to be integrated into the store's POS or other system or linked to its LAN or WAN. It tracks individual items of inventory and automatically signals the need for replenishment, preventing both out of stock (OOS) and overstock (OS) situations. The display uses a specially designed electronic module called Glass Shelf that is built into the fixture or display. "The module uses low cost, disposable RFID tags on individual items to wirelessly transmit data to a web service using our Glass Pipeline," explains Peter Grimlund, Seeonic CEO. "We then use proprietary algorithms and predictive analytic tools to anticipate and forewarn of the need for stock replenishment."Contactless Payment CardsWith Americans increasingly on the go and pressed for time, contactless payment cards are becoming increasingly popular, especially for lesser value items such as fast food for which they don't want to wait to sign a receipt. "The total number of branded credit and/or debit cards issued in the United States reached more than 60 million through the end of 2008, with the largest annual increase occurring last year," says ABI's Liard. "That figure is projected to grow by another 40 million, to 100 million by the end of 2009."This projected growth has caused Texas Instruments, which supplies RFID readers and transmitters, to realign its resources to concentrate on this rapidly expanding market. The company has an ultra-thin module for a contactless payment chip, so card manufacturers can print graphics-rich artwork on thicker stock while maintaining the same overall card thickness, says Trevor Pavey, TI Manager of Contactless Payment. So will contactless payment cards be the "Killer App" that propels RFID into the stratosphere? Michael Liard doesn't think so. "That will be when they combine contactless payment cards with your smart phone," he says. "When you no longer need to carry separate cards and take your wallet out of your pocket or purse to make a purchase, RFID will become truly ubiquitous."

RFID On Track

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