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Momentum builds for retail RFID in 2013

It’s an exciting time to be involved with RFID and retail. Although some of the larger retailers like Walmart, JC Penney and Macy’s didn’t meet overall deployment goals for 2012, the chains will be operating at a much greater scale next year. And the emergence of Zara, the Spanish chain owned by Inditex, picked up some of the tag demand in 2012.

“I think 2012 was the breakout year,” says John-Pierre Kamel, a principal at retail consultancy RFID Sherpas LLC. “Even if some of the things that make it a breakout year don’t happen until next year,  the public announcements by JC Penney and Macy’s set the stage and make it real.”

Apparel retailers are leading the item-level charge.

Macy’s has made numerous statements about its storewide deployment, and JC Penney CEO Ron Johnson unveiled plans in July to tag all items in its stores and eliminate traditional checkout areas.

Mike Liard, director of Auto-ID at VDC Research, says that while some of the larger rollouts didn’t live up to expectations in 2012, next year looks strong. He expects the Macy’s deployment to hit full stride in April, while American Apparel is expected to increase the number of RFID-enabled stores from 160 to 220 during 2013.

“A lot of people thought that tag volume would be filled tremendously by JC Penney, Macy’s and Walmart in 2012 and that didn’t happen for a variety of reasons,” says Liard. “The emergence of Zara filled some of the demand that we were anticipating, and that project has a large volume tied to it over the long term. The addition of a new retailer to the mix is great.”

All signs indicate that there will be many more to come in 2013, as item level tagging expands from apparel tagging to fragrances, cosmetics and electronics. Still, the systems and tag business associated with apparel RFID will grow at double the rate of the overall RFID market for the next 10 years, according to research firm IDTechEx.

And a new report from Frost & Sullivan states that the RFID retail market will grow from $289 million in 2011 to $3.2 billion in 2017. The research covers tags, hardware and middleware/software. Key growth businesses include apparel and footwear, perishables, jewelry, and personal care. In addition, specialty retailers, such as Danier Leather in Canada, are starting to emerge.

The enhanced benefits in various business processes across the retail supply chain will continue to drive RFID adoption. Advantages include better inventory management, improved operational efficiency, reduced labor, greater visibility, information accuracy, higher sales, and enhanced customer service.

“The increased prominence of item-level tagging will further augment opportunities for RFID across retail applications,” says Frost & Sullivan senior research analyst Ram Ravi. “Tags and hardware (readers and printers) are expected to witness considerable increase in demand as a result of the rising preference for item-level tagging.”

Future Store, RFID in retail, item level tagging

A Future Store pilot will open in Russia next month.

While North America is leading the charge in apparel retailing, projects are heating up around the globe.  In Russia, a RFID project led by a consortium of companies is expected to put that country on the map when it comes to tagging food items.

In June 2011 RFID 24-7 reported on a consortium of companies in Russia that had banded together to conduct research on the Future Store, an RFID-enabled retail strategy that would increase inventory visibility, reduce the need for checkouts and allow stores to run with minimal staffing.

That research is coming to fruition. According to RFID hardware supplier Nordic ID, the project will be commercialized in 2013, with the first pilot opening by the end of next month.

At the time of the 2011 announcement, the project carried a budget of $350 million rubles, equal to about $11.5M U.S. Nordic ID signed a letter of intent to become a supplier for the project this week.

“The Russian Future Store is a store with no queues, with a minimum number of personnel and cashiers,” Olga Karaeva, director general of the Future Store, told Nordic ID earlier this year.

“It provides a complete goods delivery control from manufacturer to consumer, the ability to track the movement of goods from the warehouse to the sales area, the shelf life of each item and instant information on the number and composition of the products on the shelf, fast inventory and expiry date control. It is a fully automated shopping process, with RFID playing a key role.”

Kamel, who has been working the RFID trenches for more than a decade, is excited about this year’s developments and is bullish on the deployment cycle for 2013. He says that the drive to omni-channel retailing will accelerate adoption.

“We’ll see a bunch of new retailers jump in next year,” says Kamel. “We’ve seen people put their toes in the water to see if this is what they want, but we’ll see additional retailers get involved. It won’t just be Walmart, JC Penney and Macy’s that we are talking about.”

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