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2016 should see strong growth for RFID in retail

2016 should see strong growth for RFID in retail

RFID technology made big strides in 2015. The apparel sector continued to lead the charge on tagging, with 3.75 billion clothing items carrying RFID tags. Cosmetics, electronics, alcohol and other consumer goods also began to see heavier tag usage.

As we start a new year, 2016 holds even more promise. According to research firm IDTechEx, the apparel sector will consume 4.6 billion tags this year, an increase of 875 million tags. The 4.6 billion tags represents only about 10 percent of the entire apparel market, leaving strong room for growth.

“There are massive rollouts coming in 2016,” says Bill Hardgrave, worldwide RFID expert and Dean of the Harbert College of Business at Auburn University. “We are still seeing accelerated adoption with more and more retailers and now brand owners getting involved.”

Several major events generated significant momentum for RFID in 2015:

* In May, Target unveiled that it is deploying RFID across all 1,795 stores, in what should be retail’s largest deployment to date.

* Amazon confirmed that it is conducting pilots to use the technology throughout its worldwide supply chain.

*Macy’s credited the inventory accuracy enabled from RFID for increasing sales and allowing it to roll out same-day delivery.

*Sporting goods retailer Decathlon rolled out RFID to nearly 1,000 stores worldwide.

* RFID solutions provider Impinj sold its 10 billionth chip.

Raghu Das, CEO of IDTechEx, says that apparel is still king in RFID tagging and will continue to be.

“There is a lot of room for growth,” he says. “There is a long way to go with 40 billion taggable apparel items, although not everyone around the world will use RFID. The question is what is next. Everything else is growing, but on a slower basis.”

Cumulatively, 9.2 billion RFID tags have been sold in the retail market for use in item level tagging and CPG case and pallet tagging. Apparel tagging, which represents about 80 percent of market volume for passive RFID tags in 2015, will continue to see explosive growth. However, Das says that expansion into sectors such as asset management and logistics will shrink apparel’s share of the market to about 60 percent by 2018.

More than 4.5 billion clothing items will carry RFID tags in 2016.

Hardgrave says that retailers are chasing two new trends when it comes to RFID. For starters, they are now accustomed to thinking beyond initial use cases like inventory accuracy and out-of-stocks, and putting more attention on secondary use cases like omni-channel and enhancing the customer experience.

“The appeal of those secondary use cases is actually starting to pull in some retailers who have been on the sidelines,” says Hardgrave. “Moving forward, retailers are going to start getting very creative and finding ways to differentiate themselves from competitors.”

One example: Ralph Lauren’s trial of a RFID-enabled fitting rooms at its New York City flagship store on Fifth Avenue. Ralph Lauren is piloting a touch-screen mirror from Oak Labs that syncs with the store’s existing inventory and point of sale systems, offering an engaging consumer experience. This is expected to be just the beginning of new customer engagement techniques, which could also include dynamic pricing.

Another major trend occurring in the retail sector is a willingness to look at broader portfolio of technology when it comes to deploying throughout a chain. Instead of relying solely on handheld readers for cycle counts, retailers are exploring door portals, point-of-sale solutions and overhead systems that illuminate an entire store.

“A couple of years ago this approach was unthinkable; everyone was laser focused on the same approach for each store,” says Hardgrave. “But this is something we’ve started to see in the last six months, and it sets up well for seeing some different deployments in 2016. It’s really interesting that we’ve moved down this path, and it generally shows the maturation of retailers with the technology.”

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