ABI Issues Another RFID Spending Forecast

November 30, 2010 Alex Woodie

Wal-Mart’s surprise decision this summer to give item-level radio frequency identification (RFID) tagging a go will help to drive RFID spending up 16 percent next year, according to ABI Research, which tracks spending on RFID and other emerging technologies. While the growth for 2010 is decent, it’s actually down a bit from ABI’s September forecast.

ABI’s latest RFID forecast from mid-November pegs the total global RFID market for 2010 at $4.6 billion (a number that does not include car immobilization devices). Next year, the total spending should account for $5.3 billion, a 16 percent year-over-year increase, the firm says.

Analysts at ABI say “massive retail deployments” are the key driver of the current and near-term growth. “Item-level apparel tracking is probably the biggest area to watch in 2010-2011 and beyond, especially due to Wal-Mart’s ‘jeans and basics’ tagging announcement,” ABI’s Michael Liard says.

In August, Wal-Mart announced to its suppliers that four categories of clothing–men’s jeans, T-shirts, socks, and underwear–would be the subjects of a new mandate for item-level RFID tagging. The announcement, which Wal-Mart managed to keep secret for months, came on the heels of a disastrous experiment with pallet-level tagging that Wal-Mart had sprung on its suppliers about seven years earlier, and which it had been forced to scale back.

A lot now hinges on how the Wal-Mart experiment in item-level tagging goes, and whether other retailers decide that RFID technology has matured and prices have dropped enough to warrant a larger investment.

In the meantime, we’ll have wildly fluctuating RFID forecasts, such as the ones from ABI, which just two months ago unveiled an extremely rosy forecast that predicted RFID spending would hit $6 billion in 2011, and that annual spending would range from 22 percent to 29 percent, per year, from 2010 to 2014.

Now, ABI is scaling back those rosy predictions. In fact, the new forecast seems more in line with the firm’s November 2008 predictions which forecasted a compound annual growth rate (CAGR) of about 15 percent from 2010 to 2014.

Like a game of roulette, with all those numbers floating around, chances are decent that ABI will hit on at least one of them.