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

Limited Capacity for Thermal Ribbons to Create Opportunity for Direct Thermal Solutions

Leading suppliers of thermal transfer ribbons are facing raw material constraints, which means they will be raising their prices and placing their largest vendors on allocation by establishing fixed volume commitments for 2011.  Why? Thin film PET suppliers have shifted capacity to meet increased demand for thicker films used in support of more profitable applications, such as the production of flat screen displays.  This shift in capacity, coupled with other raw material price increases (wax, resin, solvents, etc.), has left thermal transfer ribbon converters scrambling to meet the demands of an increasingly price sensitive market. 

While most leading converters believe the raw material capacity issue will be resolved in 2013, many are thinking about what a thermal transfer ribbon shortage might mean for their business.  At VDC, we’ve witnessed a gradual, but persistent migration from thermal transfer to direct thermal printing technology over the past decade, and data collected in Q4 of 2010 suggests that this trend will continue throughout 2011. 
 
 
In 2010, direct thermal and thermal transfer label material shipments were virtually the same; however, now that capacity and raw materials pricing pressures are plaguing the ribbon supply community, we are predicting an accelerated migration, particularly in markets with a high use of wax ribbon printing on common substrates and where today’s direct thermal media represents a viable alternative to thermal transfer.  Which applications?  Those 4X6 compliance shipping labels that have been bread and butter for thermal transfer solution providers for decades will certainly receive increased scrutiny, as will other applications as deploying enterprises take another look at direct thermal media and its capabilities.

EAS Gets a Boost from RFID

Checkpoint Systems recently introduced its Overhead RFID EAS system, a packaged solution that combines EAS with RFID.

Checkpoint, a market leader in loss prevention solutions for retail, just introduced its first EAS/RFID system.  The solution, which includes a low-profile, concealable overhead reader, satellite antennas, software and an alarm box, is targeted at most retail installations, particularly image-conscious fashion/clothing retailers who desire an unobtrusive and smart EAS solution.  

The new system leverages Checkpoint’s Wirama reader, the first reader fully manufactured by the company and a result of its 2009 acquisition of Wirama.  It is further differentiated by its use of hard tags, as opposed to consumable hang tags. Hard tags—which account for the vast majority of item-level tags in retail—were chosen to increase security (hang tags are relatively easy to remove) and to maintain consistency with current EAS form factors used in apparel. 

The performance of this solution still has some limitations (for example, no add-ons for metal detection to combat foil bags), however, the value it offers is significant and is expected to simplify cost-justification.  This system offers EAS that performs similarly to traditional solutions, but is enhanced with RFID capabilities. As a result, instead of simply alerting associates that an item is leaving the store without authorization, the Checkpoint solution is capable of identifying what specific item(s) were taken and directing that information to ensure the most appropriate and timely response. Furthermore, the system is capable of identifying potentially suspicious merchandise movement, enabling associates to take preemptive measures.

Specifications are provided on the Checkpoint website (http://www.checkpointsystems.com/) – look into the location, merchandise direction and inventory control capabilities to see further differentiation points and value add capabilities.

The press release for this product can be downloaded on the Checkpoint website or by clicking the following link: press release.

Retail Technology Convergence

Consumers today are increasingly leveraging the incredible depth of information available to them and exercising total control over the purchase process. By necessity, retailers are embracing this shift in control, taking the checkout to wherever the customer may be (case in point: large-scale mobile device deployments in Home Depot and Nordstrom). Suppliers of customer engagement technologies have, similarly, had to be agile and learn the importance of channeling their customers’ input into device functionality and solutions set. A recurring theme across many, if not all, of the technologies that we cover here at VDC has thus been mobility. Be it a mobile POS, transaction terminal, receipt printer or a personal shopping device. 

The need to expedite the check-out process and effectively engage today’s increasingly mobile customer while also presenting a technology-forward image in order to strengthen loyalty seems to be the driving factors for growing adoption across all strata of technologies. What is even more interesting is the degree to which the form factor is being patterned according to consumers’ personal handhelds – never before have consumer products influenced enterprise-grade technologies to such an extent.

This new universal form factor is blurring the lines between some of these customer engagement technologies, which have in the past had their suppliers enjoy distinct boundaries encompassing target markets/verticals, feature & functionality sets, and expectations that were more or less set in stone. For instance, POS Terminal bellwethers such as NCR, IBM and Wincor Nixdorf are today directly competing for tighter retail IT budgets with vendors such as Motorola, Honeywell, VeriFone and Ingenico who have each, to varying extents, expanded their portfolios or device functionalities to include mobile POS solutions. Consumer-grade Apple products with integrated barcode scanners and card readers are also in very high demand especially amongst fashion retailers. While these are currently complementary to their stationary counterparts, VDC’s latest research on the POS market indicates a much higher annual growth rate for mobile devices which will eventually come at the expense of this traditional form factor.

At what pace is investment on these mobile devices taking place? How is this tussle between traditional and next-generation form factors shaping up? How are suppliers enhancing their software solutions portfolio to run seamlessly across a plethora of disparate technologies? For answers to all of these questions and more, stay tuned to our continued coverage of Customer Engagement Technologies (CET).

 

Webcast on Remote Device Management for Barcode Scanners

We will be discussing the results of a North American survey on the use of Remote Device Management (RDM) for barcode scanning solutions. RDM enables the ability to obtain, aggregate and distribute information pertaining to the status of scanning devices from a remote or centralized location.  This information can be used for a diversity of applications such as configuration, troubleshooting, commissioning software/firmware upgrades, analyzing usage requirements and maintenance – all of which provide increased visibility, operational efficiencies and cost savings.  In this webcast, we will provide insight into the end user’s value perception of RMD for barcode scanners as well as the following:

• Current usage of RMD for scanning
• AIDC devices expected to be supported by RMD solutions
• Preferred RMD capabilities
• Adoption Drivers

You can register for this webcast here.

Kiosks – Ringing in a New Age

Interactive Displays & Digital Signs and consumers’ personal handheld devices (including smartphones and tablets) have been steadily converging with kiosks and increasingly changing the market’s landscape.  These devices have caused kiosk vendors to rethink and re-engineer their traditional applications such as product/service information lookup and wayfinding, particularly for consumer-facing organizations. While these applications continue to be popular, organizations are constantly looking for solutions that effectively align with and engage their increasingly technology-savvy consumer base, enhance their in-store experience and improved customer loyalty. Kiosk suppliers are responding to this increased convergence by:

- Enhancing the software solutions set for self-service kiosks – Kiosk suppliers are leveraging relationships with ISVs and SIs to capitalize on the boon of application development in the mobile device and digital signage markets as a means to extend their own platforms. Popular applications include:

    o Smartphone applications (e.g.: RedBox mobile)

    o Online portals (e.g.:  JC Penney’s “Endless Aisle”, Toys ‘r’ Us “Wish List”, Coinstar “Face Cube”)

- Leveraging the same user experiences as some of these next-generation devices - User experience is not just about flashy imagery and music anymore … it’s more interactive.  Retailers are increasingly demanding multi-touch capabilities, particularly for kiosks and digital signage solutions, leveraging the same type of interface many consumers already use. The enhanced capabilities are enabling retailers to further interact with their customers as well as create new sales and marketing opportunities. Examples include Beyond Kiosks & iBracket (build kiosk enclosures for iPads) and IN Media (recently launched IPTV technology based HD kiosk running on an Android platform).

How is the growing surge in tablet sales expected to impact the market for traditional kiosks? Are dynamic software solutions that enable seamless in-store and cross-channel technology integration a must-have for end-users today?  We expect to answer these questions and learn more trends in our coverage of the Kiosk market as a part of the 2011 Customer Engagement Technologies Market Intelligence Service (CET). Stay tuned.

RFID End Users Cite Significant Operational Improvements

In a survey conducted in Q4 2010, we asked over 300 RFID end users about the operational benefits they associate with the technology.  They were asked a series of questions pertaining to pre- and post-RFID operational topics such as resource allocation, increased asset utilization, quality improvements, labor management, error reduction and process efficiencies/time on task.  The respondents had all been using their solutions for at least 12 months and the average operational improvement for each primary vertical is provided in the chart below.
 

Noteworthy Data and Observations

• The average improvement in operations for the entire user population was approximately 30%.
• Those using RFID in a broader/more advanced capacity (supporting more than 2 applications/product types or being used in more than 1 group/division) achieved average benefits in the range of 35-40%.
• These benefits resulted in significant positive improvements to the respondents’ companies’ bottom lines, with some larger firms citing hundreds of thousands to millions of dollars saved.
• Based on these results, more than 70% of the more advanced users indicated that they will be significantly scaling and/or expanding their solutions over the next 24 months.

Looking for New Markets? They’ve Got an App for That!

Smart phones have been a boon to the application developer community, and this community will be instrumental in cultivating demand for AIDC suppliers.  With nearly a half million apps created for smart phones, and downloads eclipsing 10 billion at Apple’s App Store alone, the implications of this mobile revolution are clear for AIDC suppliers participating in the retail and hospitality markets.

Mobile shopping applications are scaling rapidly.  The number of consumers using mobile barcode scanning is conservatively estimated at 15 million, and scanning applications are being downloaded at unprecedented rates.  A recently released Mobile Barcode Trend Report issued by ScanLife suggested 16X% growth in the fourth quarter of 2010, doubling the activity reported in Q3. 

Clearly, the capability to display and scan barcodes with consumer grade devices will create opportunities for data capture suppliers, their channel partners and the customers they serve.  Case in point: mobile coupon redemption.  Providing a transparent link between the brand owner and the consumer responding to the offer, achieving higher redemption rates, and reducing coupon fraud while taking costs related to printing and distribution out of the equation makes for a pretty compelling value proposition. 

Here’s what we think: the proliferation of mobile devices and couponing apps will drive demand for 2D imagers at the point of sale, devices that may enable a host of complementary applications ranging from age verification to auto-forms population.  That’s the value proposition for data capture companies, and one that has product managers giddy with the prospect of a wholesale technology refresh at the point of sale. 

But retailers and the customers they serve are only enamored with new technology when it works, and the proliferation of mobile software application developers presents a challenge for suppliers of 2D imagers.  The high-touch ISV partner recruitment and collaborative selling techniques historically deployed by these suppliers must be complemented by broader product marketing and training initiatives designed to address the needs of this exploding and increasingly diverse channel segment.  Webcasts, whitepapers and symposia are cost effective mechanisms to address some of the leading issues addressing this community, and these issues include:

• The benefits and drawbacks associated with proprietary and non-proprietary barcode symbologies
• The role of standards bodies such as GS1 will play in the codification and proliferation of best practices
• How to optimize symbology design and placement to improve scan rates
• What’s next: application extensions enabled by image capture 

Those suppliers who address these issues and make it easier for developers to collaborate and bring solutions to market will benefit most by securing brand loyalty with an increasingly influential channel segment. 

 

Barcode and RFID Convergence is Not About Technology

Tom Wimmer and I gave a presentation on this topic yesterday in support of the white paper we just published for GS1/EPCGlobal US, the crux of which can be summarized by the following:

• Technologies are being integrated with each other because the end user wants to leverage the information and attain the benefits from each independent system.
• Gathering and sharing information from independent systems can be attained by creating consistency within common architectures.
• This consistency can be accomplished by developing a single, unifying platform that will ensure that the information being used is essentially the same … a standard.
• Although technologies continue to be integrated with each other and leverage a diversity of carriers, the real convergence is occurring at the data level.
• Convergence is not about technology, it’s about commonality.

The PowerPoint presentation for this webcast is provided below.  If you’d like to listen to the audio recording, it can be found on the GS1 website at:  http://www.gs1us.org/epcglobal_us/education

Barcode & RFID Convergence: Enabling Greater Visibility Through Standards

View more presentations from VDC Research Group.

Presenting A Snapshot of the Imaging Solutions Market

Yesterday, we presented a webcast discussing the emerging trends among the imaging solutions market.

Unlike other data capture solutions, demand for imaging solutions grew in 2009 despite the recession, and grew significantly. Although standards and mandates helped to drive adoption, demand for imaging solutions was primarily driven by operations improvement initiatives.

While more prospective customers are considering investment in imaging than ever before, barriers to adoption remain. As prospective customers work to cost justify their imaging investments, those suppliers who position imaging as a platform for application development (supported by a nuanced understanding of their customers' requirements) will grow the fastest.

To get an even deeper understanding of imaging related opportunities in the data capture markets we cover, we encourage you to scroll through the slides below or listen to the webcast recording.

Data Capture Technology Investment: Refresh or Upgrade?

View more presentations from VDC Research Group.

RFID Tracks Well with IT Assets

We’ve been hearing about tracking IT assets with RFID since the rumblings of Sarbanes Oxley and the ‘pains’ associated with its compliance.  There’s a variety of flavors of RFID solutions targeted at this application; however, only a few have gained traction.  

Why?  Similar to many emerging applications for RFID, most vendors jumped into the market without a deep understanding of the requirements, preferences and processes.  They were essentially pushing a solution instead of developing one. 

The point here is that, as with most RFID applications, there are additional layers of complexity that need to be addressed.  And although this market could be an early adopter of OTS (Off-The-Shelf) packaged solutions, there is more to it than just tagging and reading. 

Market intelligence from all RFID communities – Supplier, Channel and End User – indicates that an RFID solution for IT asset tracking solutions should:

• Be more cost effective and efficient than existing alternative solutions
• Provide business intelligence on the tagged asset – on demand
• Provide unique asset identification and location within a rack within a room within a facility, and in some cases, tracking their movement
• Function in environments with high metal and RFI
• Be compatible/integrated with systems and solutions
• Enable simple scale and solution expansion
• Be able to store additional data pertaining to the asset, its location and environment, service record, movement …
• Be easy and low-cost to manage and maintain

I’d like to draw your attention to a few companies we feel are moving in the right direction and seem to have a deeper understanding of the solution requirements:

• RFID Global Solutions (www.RFIDGLOBALCORP.com): Partnered with Imation to provide complete data center solutions, including but not limited to receiving and commissioning, tracking movement (i.e.: data tape moving between storage facilities), inventory and auditing, and decommissioning or disposal
• RF Code (www.RFCODE.com): Introduced a rack-based solution – for open or closed racks – that leverages active RFID and IR to provide rack-level visibility with high precision and reliability … and it doesn’t take up a U (most rack-based solutions require at least 1U)

Please do not misread our tone or tenor:  We believe that this application could be as close to low hanging fruit for RFID as exists in the market. 

A number of factors point to it:  solutions continue to be developed and refined, performance is increasing while cost is decreasing, and even source-tagging (i.e.: Dell and HP) is gaining traction. 

But, work remains to close the gap between current OTS solutions and market requirements.