VDC Research: RFID, Barcode, Retail Automation & Self-Service Market Blog

NFC at NRF

NFC was a pervasive theme at the 2012 NRF show held this week in New York City. Technology vendors of all types were talking about their plans for integrating NFC into their product portfolios and, in many cases, displaying their latest NFC-enabled solutions. Whereas NFC is a nascent, still-developing technology, its presence remains somewhat confined to a few key product categories, but as consumer adoption of NFC smartphones scales in 2012 and beyond, we expect to see an increasingly broad range of customer engagement/retail automation solutions incorporate NFC into their design. What follows is an overview of some of the notable NFC activity at this year’s NRF.

• ViVOtech introduced its ViVOtouch NFC solution, which is mobile marketing software platform that allows merchants to deliver targeted/personalized content, offers and loyalty programs to customers via their NFC-enabled mobile devices. This solution also allows for interactive shopping and NFC-enabled information retrieval on the store floor, further enhancing the shopping experience. Contactless payment is certainly a hot topic, but as a standalone application its ROI potential probably is not strong enough for most enterprises to justify investment. We believe solutions such as this will drive the adoption of contactless payment NFC solutions in retail.

• NFC payment terminal leader VeriFone introduced its PAYware Mobile Enterprise for Tablets, a secure payment acceptance solution that is compatible with the company’s GlobalBay Mobile POS solution. The solution is designed to run on Apple’s iPad 2, and provides the same functionality offered by the original iPod-touch based PAYware solution. PAYware for Tablets has the same fully secure encryption as previous versions of the solution, and enables the acceptance of traditional payment cards, PIN/EMV smartcards and NFC contactless payments. The solution adds further utility for merchants via a built-in 2D barcode scanner for item scanning, coupon acceptance and inventory management.

• INSIDE Secure demonstrated its NFC-based solutions for consumer and product authentication in retail. The solution enables shoppers to verify the authenticity of high-end/luxury goods and allows merchants to confirm the identity of customers. Whereas mobile devices, particularly smartphones, are becoming an increasingly prevalent element of retail marketing strategies and consumer shopping behavior, we expect that solutions leveraging NFC for brand and user authentication will become increasingly popular among retailers of luxury and other high-end goods.

Mobility and customer engagement have been pervasive themes with retail for some time now. NFC offers retailers a way to achieve both of these strategic objectives in a manner that is reliable, fast and easily-scalable. As consumer adoption of NFC gains momentum, we expect to see an increasingly diverse range of retail technology solutions support this technology.

VDC Research’s RFID Takeaways from NRF Big Show 2012

At this year’s NRF show, RFID technology made the strongest showing VDC Research has seen yet.  From RFID vendors and their solution partners showcasing innovative end-to-end application offerings to big retailers and brands reaffirming their  RFID adoption plans, rollouts and program extensions it was clear that RFID is increasingly being positioned as a core technology that enables enterprises to “engage and evolve” (the theme of this year’s show).    

Here are a few highlights we picked up during the course of the event:

• RFID-tagged Apparel Items are the 1% – 200 billion apparel items. This was the estimated total number of apparel pieces globally that was communicated to VDC by several vendors and retailers attending NRF. So, assuming roughly 2 billion RFID tags, that translates to approximately 1% penetration.  The good news is that the percentage (penetration rate) will only increase in 2012 and beyond.
• RFID is Fashion Forward, but Going Backward (a good thing) – Retailers and brands using RFID consider themselves early innovators, positioning them as “fashion forward” versus their peers; however, RFID tagging is most meaningful when you tag at the source, or further “backward” in the supply chain.  Some exhibitors at NRF were predicting a surge in apparel source tagging by the end of 2012 and into early 2013. As a result, source tagging was major theme being identified by vendors this year.  This included strong messaging from Tyco Retail Solutions and Avery Dennison’s RBIS team on RFID source tagging solutions (including offerings that combine RFID with EAS/LP capabilities/functionality) and the announcement of a new solution called ViziT™ from SML Group Ltd.  SML works along with the Impinj STP™ source tagging platform and is able to offer high-speed RFID chip encoding and label printing through SML’s own global network of service bureaus.
• The Magic of Macy’s RFID Message – Macy’s leadership was very vocal once again about its RFID program and plans, offering highlights during a panel. Macy’s Chief Administrative Officer, Tom Cole, reportedly stated that it will only be a matter of time before RFID tags become as common as barcodes, especially for apparel.  He also indicated that while Macy’s, their competitors’ and their suppliers’/brands’ approaches may vary, it is important that we move RFID forward as an industry. We agree with Mr. Cole that RFID will be a competitive advantage and differentiator in the beginning for those that support it, but it will come down to which retailers and brands can put the technology to the best use – just like with barcodes today. 

While most NRF attendees come for what’s new in “traditional” retail solutions, many left this year’s conference with a greater appreciation for the “modernizing” retail solutions (including both RFID and NFC technologies). We expect the 2013 NRF event to carry this trend forward, showing us the next wave of innovative solutions and users of RFID and its related technologies. In fact, we think it would be interesting to see an “RFID Pavilion” or "RFID Showcase" of sorts at a future NRF conference - a dedicated area in which attendees can see how RFID, contactless and NFC technologies can be leveraged to enhance retail operations and the customer experience.

Intel gets Involved with NFC

Intel has joined the ranks of companies looking to profit from the rapid growth expected in the NFC market during 2012. In Q4 2011, the company announced a partnership with INSIDE Secure, whereby it will license several of INSIDE’s NFC offerings for use in its own products. Today, Intel revealed at CES 2012 that its new Ivy Bridge chipset supports NFC, particularly for payment and e-commerce applications. The company further disclosed that Ivy Bridge will be featured in up to 75 ultrabook devices that are expected to reach the market during 2012.

While ultrabooks may seem an unlikely form factor to support payment and e-commerce applications, these devices could support some potential use cases beyond the typical “tap-to-pay” functionality, such as auto-form population during online shopping as well as authentication of payment credentials in online transactions. Of course, these devices can also support other non-payment applications like pairing, peer-to-peer, info-tainment and access control, which will broaden their appeal to both consumers and enterprises.

Intel’s entry further boosts NFC’s near-term growth prospects. While exponential gains in NFC smartphone sales have been broadly expected in 2012 for some time now, opportunity for growth in other consumer electronics categories has been limited in comparison. Intel’s entry into NFC (and the numerous ultrabook initiatives using Ivy Bridge chips) rapidly expands the potential market for NFC devices in the immediate term. We expect that as Intel further integrates NFC into its offerings, the range of NFC device types and form factors available to end users will continue to expand.

What Themes Dominated the CET Market in 2011

In 2011, there were 3 themes that dominated the customer engagement technology (CET) landscape - Mobility, Convergence and Application Development.

The need to take the store (or the checkout environment, in the least) to the customers at the point-of-decision, as opposed to drawing them to siloed touchpoints, is contributing to this growing demand for a seamless & consistent shopping experience across multiple customer-facing technology solutions.

A whole host of retail organizations have announced consumer handheld deployments within their installation environments in order to elevate customer service levels and drive loyalty over the past 12 months. VDC expects to see continued investment by retailers in these devices in 2012, especially given their relatively low upfront costs, intuitive user interface and high consumer appeal. While the verdict is not out yet on the success of these installations, it has become fairly commonplace to read about chain-wide deployments of Apple products.

Enterprise mobile device vendors have also been investing heavily in partnerships with the Independent Software Vendor (ISV) community to offer customized application sets that enable end-users to seamlessly integrate mobile solutions into their installation environments, ensuring consistency in service delivery and customer experience. As adoption of mobile devices scales, development of applications with varying degrees of configuration and control seems to be a very distinct possibility.

Finding Success in 2012

VDC expects the most successful suppliers in 2012 will be those who enable end-users to extend the value of their initial hardware investments and reduce TCO by supporting multiple applications with a single (mobile) device.

At the NRF later this month, we look forward to seeing CET vendors’ product roadmaps for 2012. We expect they will showcase their ability to effectively engage consumers and elevate service levels by way of immersive and interactive technology solutions – in alignment with today’s consumer handhelds featuring highly responsive, intuitive UIs and visually appealing image quality.

Multi-touch displays for kiosks and digital signage solutions anyone?

My Experience at the AIM and PACK Expos

I spent two days at the AIM and PACK Expos in Las Vegas this past week.  Although light on enterprise end user foot traffic on the show floor, the AIM Expo was chock full of great sessions and presentations and turned out to be a decent peer networking event.  Most exhibitors I spoke with were expecting more of a carryover from the mammoth PACK Expo; however, the general consensus was that the sessions on various AIDC and Mobility technologies and applications made up for the shortcoming.  Personally, the slower-than-expected traffic worked in my favor as I was able to spend more time talking to the highly knowledgeable individuals manning their booths.  Special thanks to Citizens, Seiko, Datamax-O’neil, Datalogic, Intermec, Seagull Scientific, MetalCraft, DAP Technologies, Feig, Infineon, Source Tech, Flexcon and Bluestar.

The Pack Expo was huge!  Word on the street was that there were more than 30,000 attendees walking a show floor that seemed to never end.  There were impressive displays of automation, robotics, packaging and labeling, but surprisingly, there was little about AIDC solutions.  Sure, barcodes were being printed and applied at many booths, but with the exception of a few vendors, I did not get to see every booth.  Vendors such as Intermec, ITW and Videojet, track/trace solutions were severely underrepresented.  Now I know that this is a packaging and automation show, but I really expected to see more AIDC solutions represented, especially since it is a critical part of the packaging solution for most vendors (and since nearly every box being prepared or packed had a barcode on it!)

The lack of AIDC solutions at the Pack Expo was most likely the reason for the limited traffic flow to the AIM conference.  Regardless, I enjoyed both shows and very much appreciated the time and attention the vendors afforded me.  Even though I’m immersed in the AIDC market on a daily basis, I gained an enormous amount of knowledge, particularly from the AIM sessions. 

A few highlights include:

• Bluestar’s ‘In a Box’ solutions.  What a novel concept - packaging a complete, application specific solution together … in a box.  Easy to set up via basic directions and a comprehensive configuration by Bluestar leveraging their diverse portfolio of products, software and services.   Talk about an out-of-box experience.  Check it out on their website http://us.bluestarinc.com/in_a_box
• Source Tech’s new thermal printers.  Very user friendly and offering additional functionality (i.e.: USB and open software platform) while still meeting customer preferences and remaining highly price competitive.  Check them out on their website http://www.sourcetech.com/

RFID Journal Live: Putting RFID to Work in Orlando

Last week Orlando became home for nearly 2,500 representatives from RFID suppliers, integrators and deploying enterprises.  What sets this show apart from other industry events is not only the diversity of technologies, served markets and applications showcased, but the collaborative emphasis placed on using RFID to solve business problems. 

RFID has evolved, and the main event reflects this evolution.  The tone and tenor of conversations taking place in conference rooms and on the exhibit floor continues to migrate from the core technologies and their inherent capabilities (these go to 11) to the real world problems deploying enterprises are solving with the technology, increasingly enabled by open standards and supported by a growing list of complementary technologies.

Support for these trends were found throughout the RFID value chain, from new chip designs that provide increased functionality and flexibility, to new devices designed to address widening data capture requirements, to new software and service offerings designed to harness, aggregate and analyze more data than ever before:

• Chip designers at Impinj and NXP have been hard at work addressing customer requirements that arise as their chip sets are deployed.  Each of these suppliers announced new offerings in Orlando, pushing the technical boundaries that limited the functionality of previous designs.  Impinj took the best in show award for its Monza 4 tag chip family, which delivers unique privacy, performance, and memory benefits to customers with challenging RFID applications, and NXP answered with their new UCODE G2iL chip series delivering extended read ranges, unique anti-tampering and privacy protection features.
• Motorola introduced a new hybrid presentation imager with an integrated RFID reader.  The DS9808-R is the first combination 1D/2D bar code scanner and RFID reader, but also the first combination handheld/hands-free UHF RFID reader. This device will enable retailers to manage existing store operations while exploring the benefits of real-time item-level inventory visibility.  
• Savi announced its partnership with Odin to provide a unified passive and active RFID software platform designed to exploit the full range of RFID and related AIDC technologies, enabling customers to more effectively track and manage items, assets and containers in the Aerospace & Defense, Government, Manufacturing, Healthcare, and IT Services industries. 

Nowhere in these companies’ presentations were there extended discussions about feeds, speeds, bits or bites.  Instead, an emphasis was placed on where to look for data to develop information, how to aggregate this information, and how to use the intelligence derived from this information to more effectively manage risk, reduce operating expenses, retain customers and grow revenues.  These conversations suggest that RFID is turning a corner, becoming a viable platform technology that will prove indispensable for the data, insight and perspective it can provide.

Market Update & 2010 Outlook - RFID, Barcode and Retail & Transaction Automation Equipment

What technical, commercial and operational issues will you have to address this year in order to remain competitive?  To help you answer these questions (& more), we've got two great webcasts coming up next week that we wanted to make sure to share with you. 

Retail & Transaction Automation Equipment – Market Update & 2010 Outlook
January 19, 2010 @ 1 p.m. EST

• What are the macro economic trends that will impact future investments in retail automation technologies?
• What are retailer and b-to-c operators strategic and investment priorities in 2010?
• Which markets segments will provide the strongest near term growth opportunities?
• Will the upgrade/ extension market be a more important source of revenue in the current/ emerging environment? Should peripherals and accessories lines receive a greater share of sales and marketing investment?
• How has the recession-shaped current environment impacted self-service investment? Deployment? Operation?

Details & Registration

Barcode and RFID – Market Update & 2010 Outlook
January 20, 2010 @ 1 p.m. EST

• Beyond the recession, what were the underlying causes of the 2009 market contraction? Was it something structural?
• Which tech or customer segments of the AIDC market were most impacted?
• Which market segments will provide the strongest near-term growth opportunities?
• Where will barcode and RFID technologies most likely converge? Compete?
• Which traditional & emerging sales and deployment models warrant serious investment consideration?

Details & Registration

If you cant make it to the live webcasts, please register anyway and we'll make sure to send you a link to the recording.

NRF's 99th Annual Expo and Convention - Schedule a VDC Analyst Briefing

We will be attending NRF's 99th Annual Expo and Convention on January 11th, at the Jacob K. Javits Convention Center in New York, NY, and if you're attending, we're interested in meeting with you!

Chris Rezendes & Rory Gardner, will be attending the event and would like to discuss your organizations most recent product developments, share our recent research findings, and explore how we may be able to help you.

If you will be attending the show and would like to schedule some time to meet with the VDC team, please feel free to call Rory Gardner at 508.653.9000 ext. 149 or e-mail him at rgardner@vdcresearch.com.