Item-level Tagging Continues to Grow in the Apparel Sector

Thanks to initiatives launched by major retailers such as Walmart, JC Penney and Macy’s, RFID item-level tagging is being deployed very rapidly in apparel and footwear markets. Item-level passive UHF tags now make up an increasing share of the total world market for RFID tags. Analyst firm ABI Research forecasts that more than three quarters of a billion RFID tags will be used in global apparel markets in 2011.

“RFID systems allow apparel retailers to get a better handle on inventory, reducing costs and preventing out of stock situations that result in loss of sales,” says Bill Arnold, principal analyst with ABI Research. “The growth in retail item-level tagging is huge, both in shipments and in total spending. The average growth rate is close to 60% for the next three years. In fact, the number of tags that will be used for retail item-level tracking in apparel alone is likely to exceed the total number consumed over the past five years for all RFID markets combined.”

Typical ROI times for such RFID deployments are only three to six months, but, says Arnold, “The state of the global economy is still creating serious delays in getting money allocated to retail RFID. Executives are still very uneasy about business conditions and availability of credit, and while item-level tracking systems are technically scalable right down to small businesses, credit will be the big limiting factor for smaller independent stores.”

A related use of RFID in retail is in electronic article surveillance systems: loss prevention tags containing only one bit of data. This segment is led by Checkpoint and Tyco Retail Solutions.

Research director Michael Liard adds, “Retail adoption of RFID at the item level parallels the course barcodes took about 30 years ago. The main difference this time is that retail department stores, not grocers, are leading the charge.”

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