According to research from ABI Research RFID entered its second phase, as many businesses that started with small investments during the course of 2004, turned the corner to fully embrace the technology.
Earlier studies by ABI Research found that retailers had begun to embrace RFID to a greater or lesser degree. However, many companies started only small-scale deployments, allocating much lower budgets to the effort than analysts had predicted.
"We are seeing companies increase their RFID budgets three to five times this year compared to 2004," said Erik Michelsen, ABI's director of RFID research.
Personal care and cosmetics giants that were named by the company as heralding this new era of RFID included Gillette, Kimberly-Clark, Proctor & Gamble and Johnson & Johnson.
While many smaller and more specialised RFID vendors were involved in trialing the technology during the course of 2004, ABI says that its feedback indicates that in this next phase of implementation, companies buying the technology will more often return to their traditional technology partners for larger and more integrated solutions.
"In 2004 we saw many end-users working with smaller RFID companies," said Michielsen, "but the big-name relationships didn't come, because they weren't necessary. Now if companies are going to make a big investment in RFID tags and readers, they'll turn to the partners traditionally able to meet their needs, who can provide a global service. Many RFID companies can't do that."
What the larger retail companies have discovered is that many of the smaller technology companies providing RFID solutions have simply been unable to keep up with the sheer volume of their growing demands.
That will be the case even if RFID is not central to these old partners' businesses, as in the cases of vendors like Avery Dennison, CCL, TI, Philips, LXE, Symbol, Zebra, and technology solution providers such as Cisco, IBM, Microsoft, Oracle, SAP and Sun.
RFID is a technology that incorporates the use of the electromagnetic spectrum to uniquely identify retail goods. For retailers the technology is coming into increasing use as an alternative to the bar code. The advantage of RFID is that it does not require direct contact or line-of-sight scanning, making it cheaper, easier and more effective to implement.
Basically it is a tagging system which helps in every aspect of logistics and distribution for retail goods.
Leading the way in the retail sector has been global giant Walmart, which set a deadline of January 2005 for many of its major suppliers to meet its new RFID requirements. Because Walmart is the biggest retailer in the world, this move has meant that RFID is now set to become the replacement for outdated barcode technology.