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

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 [email protected].

RFID Adoption Expected To Be Strong in 2010

The impacts of the recession were felt as early as late Q2 of 2008, with the first half of 2009 demonstrating some of the slowest growth the RFID industry has ever bore. Many end users cut their 2009 RFID budgets and either slowed or stopped evaluations, pilots and deployments; however, we are happy to say that recent data gathered during the second half of 2009 indicates that spending on RFID is on the rise and, in fact, many supplier opportunity pipelines and end user budgets are expanding once again. As the economy becomes more stable, end users are freeing up budgets and returning/reviewing their RFID adoption plans with increased vigor and a broader vision.

Why? Well, there are several reasons behind this, including but not limited to …

• The end user is expecting to do more with RFID and the supply community is more prepared to meet those expectations (see our previous blog).
• As the end user leverages the business intelligence available from RFID to gain operational, cost, and other efficiencies and advantages, the solution will continue to become more core to the enterprise and its supporting value chain.
• Adopting RFID has become simpler and less risky. For example:

RFID has increasingly been positioned as a complementary technology to a diversity of legacy solutions and infrastructure (i.e.: Barcode). This has not only enabled the end user to become acclimated to the technology at their own pace while limiting risk, but also has given the RFID supplier community a platform on which to build/strengthen and grow relationships, as well as help their clients fully understand the value of RFID and how this value can be extended throughout the enterprise.

New sales models (i.e.: Managed Services) are being introduced that enable more users – many of which would not consider RFID due to its high capital requirements – to obtain the benefits of the technology while mitigating risks associated with opportunity cost and obsolescence. These solutions are expected to make RFID accessible to new users, particularly small to mid-size businesses, who have limited access to capital for large scale investments.

RFID suppliers are more knowledgeable, savvy and experienced.

• Hardware continues to be commoditized while performance continues to improve, thus lowering the price/performance ratio and making it easier to justify adoption. For example, in the first half of 2008, most CPG firms could not justify tagging a product (with an EPC Gen2 UHF Label) valued at less than $25, but in the second half of 2009, these same companies have reassessed that value to be around $15 and expect it to drop to $10 within 12-18 months.

We know that there are more reasons behind the anticipated upswing in RFID adoption and look forward to identifying, validating, and discussing them here and in our reports throughout the year.

Retailers - Is your Multi-Channel Marketing Strategy a Success?

The idea of multi-channel marketing (MCM) is nothing new to the retail environment – far from it in fact.  

As long as retailers have been selling goods or services, they have been pursuing multiple marketing channels to promote their products and services.  The most commonly leveraged channels remain the retail shop floor, catalogs and marketing communications delivered through several media types (i.e., e-mail, snail mail campaigns, company websites, magazines, radio and TV).  However, many enterprises continue to miss out on the core benefits typically associated with MCM - attracting new customers and increasing the share of wallet with existing customers.  

Why? Many enterprises deploying MCM strategies fail to effectively define and segment their markets.  Simply put, today’s marketers need to understand their current and prospective customers on a multitude of relevant dimensions – a daunting task that few have undertaken.  Enterprises need to understand those key defining characteristics of each relevant market segment.  Next they need to identify quantifiable, behavior-based metrics associated with each defining characteristic.  Relevant examples might include: transaction frequency, purchasing preferences (i.e., payment type, schedule), purchase drivers (i.e., necessity, emotional), and interaction preferences (i.e., venue(s), complexity).  Identifying meaningful differences in preferences expressed behaviorally will enable enterprises deploying MCM marketing strategies to optimize their marketing spend and the effectiveness of each campaign.

While few retailers have effectively segmented their target markets, fewer still have been effectively executed, carefully considering and managing all aspects of the customer experience.  First, the enterprise will have to determine where and how an interaction will occur.  Whether it is in-store, online, or through emerging channels like mobile devices (i.e., smartphones, PDAs) or interactive digital signage or displays, each experience requires a level of specification and uniqueness without loosing touch with the overarching brand promise and portfolio management objectives.  Further, it’s is critical that these interactions be easily managed by any and all stakeholders interacting with the enterprise.    

Further still, the deploying enterprise will need to enable or facilitate interactions by providing actionable information.  This information must have a sense of commonality and cohesiveness across all channels.  Typically, information exchanges need to be centered on product specifications (i.e., price, discount, availability, complementary products/services) or consumer preferences.  The goal of this targeted information exchange is to drive convenient experiences that resonate with customers, inspiring repeat visits and expand the customer base.     

The final step, and potentially most important for future development, is obtaining, managing, and reacting to information gathered (i.e., customer demand, needs, expectations) from interactions occurring across all marketing channels.  Such data allow retailers to improve strategic and operational procedures as specific as inventory control, and as broad as target market refinement.  

In general, MCM must be positioned as the extension of a brand’s leadership and presence across multiple channels, without losing touch with core value propositions or jeopardizing relationships with potential consumers.  For MCM to be successful, it must continue to evolve and be managed efficiently.  Simply stated, inability to effectively establish, maintain and develop a MCM strategy will negatively impact an enterprise’s ability to compete effectively moving forward.

RFID Adoption Remains Strong, But Vision Is Changing

End users are broadening their vision of RFID.  It’s not so much about the technology and what it can do, but more about the business intelligence it generates and how to leverage that information to enable more efficient decision-making and operations throughout the enterprise and its value chains.  Most initial investigations, evaluations, pilots, and smaller-scale deployments were driven by a need to solve an immediate, less complex issue (i.e.: Tracking Assets in a Closed-Loop); however, as the RFID industry has evolved and matured, the end user has become more knowledgeable and savvy and the supply community has increasingly enhanced its ability to develop and support more intricate, higher-value add applications.  For example:

• Asset tracking in the health care market has gone from simply locating a wheelchair or pump to ensuring cleanliness compliance, association with an employee or patient, and reduction of rental requirements, amongst others
• Shipping containers in supply chain management applications are evolving from ensuring a point-to-point transition (i.e.: the container has been placed on a ship and is no longer in the port) to providing environmental monitoring, improved security, and real-time location services throughout its travels.

End users of RFID are being afforded more visibility than ever before and are increasingly thinking of new ways to use that intelligence to improve processes, reduce costs, and create opportunity

The vision and expectations of the end user have gone on a parabolic ride over the past decade.  During the early days, the end user’s vision was too futuristic and beyond the technology’s limitations, stalling adoption and giving rise to a market that continually underperformed.  Then, as the knowledge base increased and the technology evolved, perceptions came back down to earth and realigned with the solution’s capabilities, creating an environment in which the technology could live up to its expectations.  Now that RFID has established a footprint and proven itself as a viable cornerstone solution, the original potential and broader vision is back on the table.  In order to succeed in this new environment, suppliers must be able to support more advanced, deeply integrated applications, and demonstrate an ability to not only continue to innovate, but also grow with the clients.