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RFID Growth in Retail – I Believe!

Back in the early days of RFID, in particular the beginnings of the EPC market, it was easy for the RFID community to perceive that the market was evolving much faster than it actually was due to highly pervasive media hype, rogue evangelism, a continued stream of account win announcements and an overselling campaign of the technology's value proposition and business models. My mantra during those years was simply, "Don't Believe the Hype." The reality of the situation was that the RFID industry was still embryonic and not quite ready to live up to the image the media created.

We are in another round of hype and evangelism, but this time, it appears to be real. I'm specifically talking about the retail market for RFID. I'm a conservative analyst that invokes a logical, primary research dependent process to develop highly reliable estimates and forecasts. The only time I deviate from my conservative approach is when there is significant evidence that supports is one of those times.

Based on many interviews with each primary RFID community as part of our annual service—suppliers, channels and end users—there is overwhelming data that the retail sector for RFID is growing much faster than previously expected. Pilots are converting to commercial deployments, current installations are scaling rapidly and these solutions are becoming more core and deeply integrated. At first I had trouble swallowing the pill that was being given to me by the supplier community; however, after personally speaking with leading channels and end users as a means to validate their stories, I'm humbled. That's right...hard data from the purse holders and those in the trenches indicates that this market will undergo significant growth over the next 5 years. Just to give you an idea of what I'm talking about, our data suggests that transponder volumes will exceed 2 billion units by 2014, a CAGR (year-over-year growth rate) of approximately 60% from 2009, one of the highest growth rates amongst all RFID verticals.

Aside from the increased spending and massive scaling, the value added by RFID in the retail sector is also facilitating adoption and innovation throughout the value chain. Not only do many RFID applications in the retail sector transcend multiple points within the value chain (i.e. RFID/EAS, customer loyalty, contactless payment, personalized shopping experiences and Analytics).

So as a conservative analyst that has been watching this market evolve for nearly a decade, I'm confident that the hype is real...believe it!

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