Posts Tagged ‘ABI Research’

Retailers hope RFID will curb $340B out-of-stock issue

Tuesday, June 14th, 2011

Why are retailers like Walmart and Macy’s so anxious to deploy item level RFID technology? For starters, out-of-stocks are robbing them of more than $430 billion in sales each year. A new study from IHL Group says that major retailers could improve sales by close to 10 percent by entirely eliminating out-of-stocks.

While RFID can’t do that on its own, it’s no wonder retailers like Walmart, Kohl’s and Dillard’s are pursuing item level tagging with such vigor. The IHL study says that more than one in five shoppers leave consumer electronics retail outlets empty handed because of out-of-stocks.

“What it comes down to is that there is no good way of counting your items at this point in time,” says Zander Livingston, CEO and co-founder of Truecount Corp., and a pioneer in apparel item level retail tracking. “It’s tedious on the employee, it’s manual labor and employees can easily be distracted, so there are significant problems with trying to manage your inventory with human beings, particularly if you have lot of turnover. So nobody is ignoring RFID any more.”

[Click here to view RFID 24-7's previous coverage of retail item level tagging]

There are varying reports about the pace of item level tagging at the retail level. Some analysts are calling for explosive year-over-year growth for the foreseeable future. In its 2010 report, VDC Research predicted that retailers would consume 800 million tags in 2011, and 3.4 billion by 2014. Given developments that have taken place over the last year, those estimates will likely be lifted in VDC’s next report. ABI Research, meanwhile, predicted in February that the footwear and apparel sectors would consume 750 million item level tags this year.

However, some tag manufacturers say that major retailers are not adopting as quickly as anticipated. But the intent is certainly there. Major retailers banded together in November to unveil the Item Level RFID Initiative, a group chartered to spread the pace of item level adoption.

And Livingston, who founded his RFID software and services company last year, says his firm signed on four retailers in May alone, although they are mostly Tier 2 and Tier 3 players.

“People are paying attention to RFID now,” he says. “Obviously the smaller retailers can move much quicker and those kinds of companies can jump in and make decisions quickly and see more immediate results.”

Livingston says that he is seeing increased action with retailers of mobile concert items such as T-shirts and hats that travel from venue to venue. The items need to be counted each time they enter and leave a concert venue, creating huge labor costs. RFID can accomplish the task much quicker and more accurately.

“They jumped on this solution immediately,” says Livingston. “They just have really bad inventory numbers and it’s a perfect opportunity for RFID to come in with handheld mobile devices to do cycle counts for them.”

Truecount is also working with a pair of Tier 2 sporting goods stores. Livingston expects those rollouts to be complete sometime this summer. In addition, Truecount is negotiating with a dozen more clients, including a major Tier 1 retailer.

The IHL study outlines how bad the out-of-stock issue is. The study says that the amount of revenue lost to retailers each year through distortion totals $778.5 billion worldwide. More than half (56 percent, or $433.4 billion) is a result of out-of-stock items.

The report says that retailers are in denial about out-of-stocks, and that the true rate experienced by consumers is almost 18 percent, about three times higher than the out-of -stock rate claimed by the retail industry. The report says that Radio Shack has an out-of-stock rate of 22.7 percent, and that Office Max was at 30.6 percent, equal to a loss of $1.96 for each customer entering the store.

North American apparel stores experience about $23.5 billion in annual out-of-stocks, and $16.2 billion in overstocks. “We talk anecdotally about RFID as a help, but the biggest issue is poor planning and lack of staff execution at the store level,” says Greg Buzek, an analyst with IHL. “RFID typically would help about $12 billion of the $39.7 billion inventory distortion problem for apparel retailers in North America.”

According to the Item Level RFID Initiative, EPC tagging can lead to much greater inventory accuracy, moving the industry average from 63 percent to 95 percent. Inventory productivity could be increased by 96 percent, improving from 200 items per hour to 12,000 items/hour with RFID. Item level tagging can also reduce the time it takes for an associate to find a product by 18 percent. Finally, out-of-stocks can be reduced up to 50 percent, with a sales lift of anywhere from 2 percent to 20 percent resulting from item level tagging.

“I’ve always said that a misplaced item is equivalent to not having it available at all,” says Livingston. “There is a breakdown at every level, from the supplier to the DC, the DC to the store, and then store to store transfers. The more times humans touch it, the more distortion you’re going to get because humans are just not 100 percent accurate. So for every one item you are off, it creates two points of distortion within your inventory.

“But once you put in RFID and become confident with the system and you know you are at 99.9 percent inventory accuracy, you will look for that missing item because the system says you have it, and you will always find it.”

Footwear & apparel sectors will combine to use more than 750 million item level tags in 2011

Monday, February 7th, 2011

Item-level tagging continues to accelerate in the apparel and footwear markets, with those industries now making up an increased share of the total world market for RFID tags. According to a study just released by ABI Research, more than 750 million RFID tags will be used in global apparel markets in 2011.

(Click here to view RFID 24-7’s previous coverage on item level apparel tagging.)

“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 ABI Research principal analyst Bill Arnold. “The growth in retail item-level tagging is huge, both in shipments and in total spending. The average growth rate is close to 60 percent for the next three years. In fact, the number of tags that will be used for retail ILT in apparel alone is likely to exceed the total number consumed over the past five years for all RFID markets combined.”

Major retailers such as Macy’s, JC Penney, and Walmart are leading the charge to make RFID systems commonplace in the retail environment.

Arnold says that the typical ROI times for such RFID deployments are only three to six months, representing a very compelling business case for retailers. However, Arnold says that the global economy is still causing delays in deployments. And a major supplier of RFID systems to the apparel sector recently told RFID 24-7 that a large retailer recently pushed back its deployment schedule by six months.

“The state of the global economy is still creating serious delays in getting money allocated to retail RFID,” says Arnold. “Executives are still very uneasy about business conditions and availability of credit, and while ILT 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 EAS (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.”

ABI Research’s new study The Retail Apparel RFID Item-Level Tagging Market” provides current analysis and a five-year forecast of UHF adoption at the item-level in the retail apparel market. It discusses market drivers and inhibitors, along with a summary of the key RFID solution providers and product suppliers.

Impinj grabs top spot in ABI Research’s 2010 UHF RFID Tag Chip Vendor Ranking

Wednesday, January 19th, 2011

Last year at this time, Impinj was preparing for its most dynamic product launch ever, its innovative Monza 4 product line. Less than a year later, the launch played major role in Impinj achieving the top ranking in ABI Research’s 2010 UHF RFID transponder IC vendor report. The report includes ABI’s independent ratings of Gen 2 RFID tag chip manufacturers for both “innovation” and “implementation.”

(Click here to read RFID 4-7’s coverage of the Monza 4 rolllout)

“Backed by the launch of its new Monza 4 product line, IC manufacturing capacity expansion, on-going tag chip cost reduction efforts, plus the majority share position of UHF RFID tag chips sold in 2010, Impinj secured the top spots in both “innovation” and “implementation”, ranking first overall among its three primary competitors,” said Mike Liard, Research Director at ABI.

Liard says that several factors contributed to Impinj’s high innovation ranking, including strong product development, significant technology leadership, effectiveness driving industry standards and active participation in RFID awareness and education efforts. Similarly, a broad set of metrics drove Impinj’s top implementation score, including the company’s leading market share, leading competitive position and strong customer support. Impinj’s Gen 2 tag chip volume far outpaces the field, establishing a majority share position. 

Impinj president and CEO Bill T. Colleran, Ph.D, says that strong volume growth will continue. “We saw huge growth in 2010 with unprecedented demand for Monza tag chips, and we expect continued worldwide market expansion in 2011,” he says. “Impinj will continue to bring innovative products to market, add capacity and work closely with our customers to maintain this leadership position.”

ABI Research: Item level retail tagging will drive double-digit growth for RFID in 2011

Monday, November 22nd, 2010

Massive deployment of RFID technology within the retail sector will drive double-digit revenue gains in the RFID sector next year, according to a new research report from ABI Research.

ABI Research sees continuing strong growth potential in RFID markets worldwide and forecasts a total market size of about $4.6 billion by the end of this year for RFID systems (hardware, software, and services). The total reaches $5.5 billion when hardware-only shipments to support automobile immobilization are included.

By the end of 2011, global RFID system markets (excluding immobilization) are expected to amount to almost $5.3 billion, a year-over-year growth in excess of 16 percent. RFID systems software revenue will outpace that from services, transponders and readers. When automobile immobilization is included the total market size is approximately $6.2 billion, representing 13 percent growth next year.

“Item-level apparel tracking is probably the biggest area to watch in 2010-2011 and beyond,” says Mike Liard, RFID practice director for ABI, “especially due to Wal-Mart’s ‘jeans and basics’ tagging announcement.” Liard notes that JCPenney, Marks & Spencer, and American Apparel, among others, remain key retailers to watch given their existing programs and deployment plans.

Here’s a quick look at some of the other major points found in the new ABI RFID Market Data report.

Asset tracking and management: Asset tracking and management applications continue to gain momentum in verticals including healthcare, manufacturing (particularly the aerospace and defense sector), transportation and logistics.

An explosion in passive UHF transponders: According to Liard, “ABI Research expects to see a CAGR of 74 percent in passive UHF transponders from 2010 to 2014 thanks to burgeoning demand within key applications such as retail apparel tagging and asset management.”

Regional performers shine: The “Rest of World” region, which includes the Middle East, Latin America, South Africa and others, currently comprises only 7 percent of the overall RFID market but it is expected to adopt RFID solutions faster than any of the more industrialized regions. This is due to increased focus on using RFID in the Middle East in the oil and gas space and for construction; in Latin America for animal ID, food safety, and retail; and in South Africa for RTI, among others.

Wal-Mart’s multi-billion RFID tag order drives optimism in the market

Thursday, September 16th, 2010

The market for RFID products and services will surpass $6 billion next year, according to a report released today by ABI Research. ABI’s “RFID Annual Market Overview” includes traditional applications such as access control, automobile immobilization, electronic toll collection and e-ID/ID documents as well as “modernizing” applications such as animal ID, asset management, baggage handling, cargo tracking/security, contactless payment and ticketing, RTLS, and supply chain management.

The latest research indicates CAGRs of between 21.7 percent and 28.8 percent for the five primary applications from 2010-2014. Practice director Michael Liard sums up the “big picture” as generally optimistic despite last year’s economic woes, and growing more so.

Emblematic of the industry’s generally cheerful outlook is Wal-Mart’s recent multi-billion unit  passive UHF RFID apparel tag and 15,000+ handheld reader RFP order and its expected U.S. rollout, which some observers believe has sparked renewed interest in RFID for item-level tracking.

“In response to the weakened economy, most RFID and RTLS value chain participants reported reductions to marketing expenditure, staff, and on-hand inventory levels beginning in late 2008 and continuing throughout 2009,” says Liard.

As the end of 2009 approached, however, ABI Research’s conversations with vendors and solutions providers grew more positive – the market was growing, orders were being placed and user interest was picking up across industries. “Overall 2009 continued the forward momentum for both RFID solution providers and the user community,” says Liard. “That trend continues in 2010.”

Final thoughts on RFID Live

Thursday, April 22nd, 2010

Bumped into industry analyst Michael Liard on the flight back to Boston following RFID Live last week. It’s always great to get post-show opinions from the experts, so I thought I would share our conversation.

But before I get there, my first impression of the show was just how much things have changed since last year. Live was simply depressing last year. It wasn’t the show’s fault, but the economic time we were in. Nothing was happening. We’re not out of the hole, but things are certainly trending up, especially in RFID. The tech sector continues to rebound, as witnessed by financial results this week from Apple and Microsoft, which reported record earnings on Thursday.

In general, the product news and partnerships that came out of Live this year were of high value for the industry.  It was interesting to see vendors sharing booth space and collaborating on RFID solutions during presentations and panel discussions. The partnership between ODIN and Savi is one great example.

“We witnessed ecosystems of partners sharing booth/exhibit space to demonstrate and showcase total solutions while others shared presentations, panels, and press releases as collaborators on market messaging,” said Liard, RFID practice director for ABI Research. “It was good to see an emphasis on partner-based end-to-end solutions in several conversations, conference sessions, and on the show floor.  And, according to many exhibitors and ‘non-end-user’ attendees, end user traffic, interest, and awareness levels were high.”

Liard noted that RFID Live also demonstrated a growing emphasis on RFID as a complement to other auto ID, sensing, and location input technologies that can be integrated into enterprise operations.

“Within RFID technology itself there are several types of technologies than can be leveraged together: passive, active, and/or semi-active (battery assisted passive),” says Liard. “Each has its unique features and capabilities to satisfy specific end-user requirements and business objectives. And, RFID is increasingly converging and co-existing with other technologies such as barcode, sensors, Wi-Fi, WLAN, cellular, GPS, M2M, etc.

“In addition, some of the market messages communicated at RFID Live provided further evidence that an increasing number of ISVs, platform providers, and systems integrators have adopted a technology agnostic approach to solutions development. In my opinion, embracing the ‘RFID is not a silo viewpoint’ and enabling partner-based end-to-end solutions are critical to pushing the RFID industry forward.”

Let us know your thoughts on the show!

ABI study: Some parts of RFID market will see nearly 20 percent growth through 2014

Monday, March 8th, 2010

A new study released Friday by ABI Research predicts that the global RFID market will grow in double digits until 2014, at which time the market will exceed $8.25 billion. Some of the hottest sectors will grow at close to 20 percent annually.

In ABI’s Semi-Annual RFID Market Data study, Mike Liard, RFID practice director for ABI, says that the market will reach $4.47 billion (without automobile immobilization) this year, which represents a 15 percent increase over 2009 predictions.

“Not all segments of the RFID market are created equal,” says Liard. “To 2014, the greatest growth will be found in RTLS (Real Time Location Systems), baggage handling, animal ID, and item-level tagging in fashion apparel and retail.”

Other key opportunities include electronic vehicle registration, continued penetration of RFID-enabled e-ID/e-government documents (including health cards), and continued expansion of library systems. Liard expects slow but continued progress in retail CPG supply chain management, and multiple flavors of asset management that leverage RFID technologies, including specialty passive UHF tags.

“Modernizing” applications for RFID will grow more rapidly than their “traditional” predecessors such as access control, automobile immobilization, electronic toll collection and others that account for slightly more than 61 percent of the market today. While those traditional apps are expected to grow six percent annually for the next four years, modernizing applications like animal ID, asset management, baggage handling, cargo tracking and security, POS-contactless payment, RTLS, supply chain management, and ticketing are forecast to grow roughly 19 percent.

This year’s $4.47 billion figure does not include automobile immobilization, nor do any of the study predictions. Automobile immobilization is the largest single RFID application and has a low growth rate which impacts overall market size, so it is often excluded when examining market trends.

Motorola tops ABI Research passive UHF handheld RFID reader vendor matrix

Wednesday, March 3rd, 2010

Who’s the best of the best when it comes to vendors of UHF RFID handheld readers? According to ABI Research, Motorola is king.

Motorola is ranked at the top of the latest Vendor Matrix — a worldwide evaluation of handheld reader vendors — released by ABI Research this morning. Convergence Systems Limited (CSL) and Psion Teklogix Inc. claimed the second and third spots. It should be noted that product performance benchmarking is not a focus of the Vendor Matrix, although it is taken into consideration. Rather, when it comes to innovation, ABI examined the vendor’s product offering mix and the overall designs of readers, GUI and/or user input configuration, and critical performance enhancements such as battery life expectancy, antenna design, and wireless connectivity options. Motorola’s industry leadership, influence, and knowledge transfer were evaluated, as well as perceived strength and innovation in engineering.

As for the implementation portion of ABI’s research, the firm scrutinized the vendors according to the following criteria: manufacturing capabilities and strategy; pricing strategy and perceived price-to-value quotient; overall market position, leadership, and strength; perceived strength within verticals and/or applications targeted/served; persistent market presence and experience; partner strategy, approach, and support capabilities; scope of distribution channels; and go-to-market strategy and approach

“Mobile computing, bar code scanning, and RFID are highly complementary technologies and major strengths for Motorola, helping drive handheld product innovation within the organization,” says Michael Liard, RFID Practice Director. “The company’s global reach, partner/customer support capabilities, installed base, and an approach to RFID that cuts across many industries while addressing the needs of verticals all helped bolster the overall implementation score relative to the competition.”

The Passive UHF RFID Handheld Reader Vendor Matrix is an analytical tool developed by ABI Research to provide a clear understanding of vendors’ positions in specific markets. Vendors are assessed on the important parameters of “innovation” and “implementation” across several criteria unique to each vendor matrix.