The radio frequency identification systems "allow apparel retailers to get a better handle on inventory, [thereby] reducing costs and preventing out-of-stock situations that result in loss of sales," said ABI analyst Bill Arnold in a statement.
"The growth in retail item-level tagging is huge, both in shipments and in total spending. The average growth rate is close to 60% for the next three years," he said.
Major retailers such as Macy's, J.C. Penney and Wal-Mart are leading the way in item-level RFID, which can produce a return on investment in three to six months, ABI's market research report said.
The remaining challenge is getting executive approval to invest in the technology. "The state of the global economy is still creating serious delays in getting money allocated to retail RFID," Arnold said. "Executives are still very uneasy about business conditions and availability of credit, and while item-level tagging systems are technically scalable right down to small businesses, credit will be the big limiting factor for smaller independent stores."
Michael Liard, ABI's research director, said that adoption of RFID at the item level "parallels the course bar codes took about 30 years ago. The main difference this time is that department stores, not grocers, are leading the charge."
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