Market Overview of RFID

Wal-Mart has announced that its 100 top suppliers must tag their deliveries (at pallet level) by 2005.This mandate for a phased rollout, in tandem with large pilots at Target, Albertsons, and other organizations, including some US pharmaceutical companies, has raised expectations for future market size and growth.This uptake in the supply chain is mirrored by RFID deployments by the US military and by a range of other applications in agriculture, tourism, and asset management.

As a result of global RFID pilots and phased deployments, projections for 2005 indicate that growth in the worldwide transponder (RFID tag) market will be £464m, equating to 24 percent (Venture Development Corporation, March 16 , 2004). At the same time, the value of the reader market globally will grow by 59 percent to £372m.

In Europe, a host of organizations including Carrefour and METRO are already putting RFID solutions through preliminary trials. Manufacturers such as KiMS in Denmark are also piloting the technology.Research by RF & Microwave Industry News suggests that 41 percent of European retailers are planning RFID pilots for 2004 (RF & Microwave Industry News, February 5, 2004). According to estimates provided by leading pharmaceutical manufacturers, following their pilots it is estimated that RFID-based solutions could save the industry more than $8 billion by 2007/8.

But what about small and medium businesses? Is RFID applicable to them? Nigel Montgomery of AMR Research states that "RFID is not just applicable to large household named companies, whilst it would seem so from the names of most early pioneers. Nor is it only viable at high volume. If anything, small-medium sized companies should be able to benefit faster than larger companies. But the potential return on investment (ROI) on an RFID-based project should not be about volume, it's more likely to be determined by pareto ranking, that is, 20 percent of the products represent 80 percent of the value of inventory." (RFID in Manufacturing, Nigel Montgomery, AMR Research, 2006)

This global interest in RFID as a key enabler for the supply chain and for achieving greater traceability for goods and equipment is also stimulating the market for software that supports RFID. In 2005, this will increase by 40 percent to £323m (RF & Microwave Industry News, 5 February, 2004). ABI Research also highlights that RFID integration services will surpass RFID equipment revenues by 2007, reaching more than £0.82m by 2005 (ABI Research, 10 February, 2004).