The European radio frequency identification (RFID) market in the retail industry offers considerable growth potential. The promise of enhanced benefits for businesses and the growing importance of item-level tagging will add impetus to market development. However, issues pertaining to data privacy and the lack of understanding about return on investments (ROI) threaten to slow down the pace of market expansion.
New analysis from Frost & Sullivan, Analysis of the European RFID Retail Market, finds that the market earned revenues of $289.6 million in 2011 and estimates this to reach $3,206.0 million in 2017. The research covers tags, hardware and middleware/software. Key growth businesses include apparel and footwear, perishables, jewellery, and personal care. In addition, specialty retail is also gaining prominence.
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 labour, greater visibility, information accuracy, higher sales, and superior customer service.
"The increased prominence of item-level tagging will further augment opportunities for RFID across retail applications," noted 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."
Item-level tracking provides better results in terms of inventory management and visibility along the supply chain while helping negate the impact of counterfeit products. In addition, mandates from retailers such as Wal-Mart, Gerry Weber, and METRO to implement item-level tagging in their outlets are also boosting demand for RFID pilots and implementation.
However, the lack of clarity about integrating RFID with existing IT systems is inhibiting adoption rates. "Issues related to integration can be attributed to the skill level of system integrators, the existing infrastructure, and interoperability," explained Ravi. "While the impact of this challenge is likely to be limited in the short-term as the adoption of RFID technology in the retail industry is still in the early stages, it is expected to intensify as RFID adoption becomes more widespread."
The choice of system integrators will be key to successful implementation. System integrators will require complete awareness about the processes involved in the retail supply chain as well as expertise in the handling, installation, and maintenance of the RFID-related products. Failure to meet these standards may result in adverse effects which, in turn, will impact adoption levels.