Retail to be biggest consumer of RFID

Despite a number of high-profile pilots, retail is not the most avid RFID user to date – but it won't take long to catch up.

RFID analyst house IDTechEx is predicting this year will see a total of 1.3 billion tags sold – drastically overshadowing the 2.3 billion purchased in the 60 years up to 2005.

The analyst predicts the overall RFID market, including software and services, will similarly skyrocket, reaching $26.2bn by 2016 – a roughly tenfold increase on 2005's figure. IDTechEx expects the postal industry, retailers and pharmaceuticals to be at the forefront of buying.

Among the RFID technologies the research company expects to grow is real-time location services based on active RFID tags, which gives companies the ability to locate assets wirelessly. The IDTechEx report predicts this area of RFID will be worth $6bn in 10 years' time.

According to the study, by far and away the vertical spending the most on RFID has been to date the transport and travel industry, splashing out around $1bn. Security has also been flooding the RFID industry's coffers, spending around $670m, on access cards and the like.

Third place goes to the retail/consumer goods industry, which has spent $230m on equipping pallets and cases with RFID. The analysts believe the retail industry remains the vertical with the most potential to adopt the track and trace technology in the future.

The report said: "All agree that CPG [consumer packaged goods] is the biggest potential for [the] EPC [standard of RFID] and RFID in general. Although unpackaged consumer items are also a large figure there are many reasons not to tag them although it will be done to some degree."

IDTechEx predicts tagging of pharmaceuticals will become mainstream in 2006 and 2007, and consumer packaged goods by 2007. The report also foresees greater adoption of RFID to track airline luggage by 2007.