Report: Retail RFID Spending To Hit $4.2 BillionReport: Retail RFID Spending To Hit $4.2 Billion

Revenue in the radio frequency identification technology (RFID) market for retail totaled $400 million in 2004, and estimates put the technology at about $4.2 billion by 2011, according to a report released Thursday by research firm Frost & Sullivan.

The study reviews retail spending for RFID hardware, software, middleware, consulting and services, and analyzes the potential of RFID technology looking at market trends and opportunities.

VeriSign Inc., which provides secured data services, can see that trend up through services it offers customers such as Levi Straus. "There are a handful of companies today that have item-level RFID pilots underway and are getting interesting results," says Jeff Richards, vice president of VeriSign’s Intelligent Supply Chain Services business. "They're not getting a lot of attention, but if you talk with other in the retail industry, that's where everyone want this technology to go because that's were you get an incremental leap in benefit over bar codes."

Retail stores already using some form of bar code or autoID technology are better equipped to handle the transition to RFID. And it's not possible to completely avoid inaccuracies through outdated form of tracking merchandise through the supply chain, the report said. Since RFID does not require a line of sight and enables more automated reading, it can reduce labor in manufacturing and distribution to enable the reduction of manual or complicated procedures in the supply chain and in the store.

The North American retail RFID market is close to 40 percent of the World total retail RFID market. Many retailers are striving to understand the aspect that will give them the best return on investment. Benefit will vary depending on the retailer's level of automation and application. Real time visibility to stock goods is what vendors are trying to help retailers achieve.

More than 70 percent of retailers in Europe, Middle East and Africa with revenues of $5 billion or more are involved in or are exploring RFID investments. Some of those include Carrefour, Metro Group, Tesco, and Marks & Spencer. Most of these retailers expected a return on their investment within five to seven years after deploying the project, the report said. Retailers that allocated less than $500,000 for RFID in their 2004 budgets, consider investments sufficient.

Hundreds, if not thousands, of suppliers will join at least one retail RFID program in the next few years. Wal-Mart Stores Inc. expects another 200 suppliers to jump in beginning January, along with hundreds that will join Best Buy's program. Metro is expected to have more than 300 suppliers on board within the next two years.