Wal-Mart RFID Announcement: a small part of industry RFID adoption
It’s a hot summer for RFID adoption news. The biggest so far is Wal-Mart's now formal announcement of a program it initiated months ago for item level retail tracking. Others may have missed a much quieter announcement in Canada mandating that all cattle be tagged. Based on our unique industry position, ODIN gets to see many other item level initiatives moving forward in IT asset tracking, aerospace tool tracking, the healthcare supply chain and even hospitality and entertainment. While there may be many very good reasons to track at the pallet and case level, the momentum is at the item level. The reason: value.
RFID is faster, better and often cheaper
This is not surprising. There are several areas where barcode and other techniques don’t provide any capabilities at all. In many of these situations introducing RFID tags reduces total costs for labor and inventory while increasing accuracy. RFID is ideally suited for situations when you need to:
- Identify many items at once
- Identify items where line of site requirements are cumbersome
- Find items quickly
- Identify items even when no human is present (or that human doesn’t follow standard policies)
RFID Retail Adoption is Strengthening and Drives Revenue
Despite all of the rumors of Wal-Mart reducing its RFID commitment, the facts consistently point more to refinement and expansion than retrenchment. Wal-Mart expanded its Sam’s Club program last year and is moving aggressively to in-store apparel tracking applications that have proven to increase sales in other companies such as American Apparel and Marks & Spencer. Other retailers such as Bloomingdale’s have documented upwards of 27% inventory accuracy improvements with item level RFID. In retail, better accuracy means fewer stock outs and directly translates into higher revenue.
It is no surprise that an Aberdeen article published this month suggested that 57% of retailers in a recent survey are using or planning to deploy RFID at the item level. We are starting to see that tipping point in retail that people have long anticipated. If not for the severe recessionary impact on retail in 2008-2009 which dried up capital for new technology investment, we certainly would have seen this sooner. The recent activity has led Reik Read of Robert W. Baird to increase his apparel tagging estimates from a 40% to over 120% growth rate in 2010.
RFID is just as strong in Healthcare, Aerospace, Financial Services and Government
In other industries, ODIN is seeing a similar trend. Although not driving headlines like Wal-Mart, these companies that often try to stay out of the limelight have been rapidly moving to RFID. We have seen upticks in item level RFID initiatives particularly related to IT assets, tools, weapons and medical implants. In the orthopedic implant industry, you can safely say the tipping point is already past. End users are now skipping pilots altogether and moving right into production – a clear sign of a rapidly maturing industry.
People familiar with ODIN will know that we have been conservative in our RFID growth estimates over the years. We saw what was happening. We knew the level of end user commitment. We knew which press releases were pilot studies and which were actual production systems. We knew which tag and reader vendors were actually receiving big orders. In 2010, we have seen an unambiguous shift. RFID adoption is accelerating across numerous industries. Wal-Mart may be the best publicized example, but from our seat, they are just another example of a broader adoption trend.
Read about why Wal-Mart won't be killing tags soon and how RFID economics make a difference here.