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VDC: 10 billion passive RFID tags will ship by 2018

The passive UHF RFID market is expected to surpass $1 billion in revenue in 2015 or early 2016 as rapid retail adoption drives strong double-digit growth.

According to VDC Research, nearly 10 billion passive UHF RFID tags will ship by the end of 2017, driven mostly by retail apparel and other high-volume applications such as anti-counterfeiting. In addition, non-apparel item-level tagging in retail, like electronics, cosmetics and jewelry, will accelerate future growth.

RFID in apparel

Retailers continue to deploy item level RFID solutions, which will drive the passive UHF market to $1B by 2016.

Mike Liard, vice president of auto-ID at VDC, says that passive UHF RFID systems (tags, readers, printer/encoders, software and services) are expected grow at a 19.7 percent clip between 2012 and 2017.

“The future market will be shaped by increased adoption, total solution development, Internet of Things enablement, and a strong focus on leveraging the data being captured by passive UHF RFID systems,” says Liard.

While passive RFID continues to make gains in healthcare, retail will clearly push passive RFID to near ubiquitous status by the end of the VDC forecast period. Improving inventory accuracy continues to be the sweet spot, but new emerging retail applications are making inventory accuracy gains almost look boring.

Retailers are beginning to utilize RFID for self checkout, and RFID enabled fitting rooms and mirrors will enable consumers to shop more conveniently while driving sales for retailers. It’s also a safe bet that RFID will put a major dent into shrink, especially internal theft. Retailers like American Apparel are already seeing gains in this area, and a major French sports retailer just deployed RFID with loss prevention are the primary business case.

RFID is in the early stages of forever changing the retail landscape, and enabling omnichannel retailing will bring dramatic changes to the customer shopping experience. Macy’s CEO Terry Lundgren expects more and more customers to visit a Macy’s store to get a live feel for a product, and then order it on their mobile device after leaving the store, or at home after conducting more research. He even says that pure online retailers like Amazon may need to alter their bricks and mortar strategy.

“I passionately believe that there will be more and more pure play online businesses that will be opening stores just to reinforce that point,” Lundgren said during a Macy’s analyst meeting in June (See coverage here). “Before the customer makes the decision to buy, they want to try on or experience the product.”

For a look at how the RFID landscape might change over the next five years, check out last week’s issue of RFID 24-7.

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