RFID - How Far How Fast - Survey Results - Consumer Business

Contact: David Schutzman
Deloitte Services LP
+1 212 492 4754

Contact: Sarah Abbott
Retail Systems Alert Group Inc.
+1 617 527 4626 ext. 117

Chicago, November 8, 2004 — According to a new international survey entitled "RFID: How Far, How Fast?" manufacturers and retailers are currently facing a variety of business and technological challenges around RFID innovation, adoption and deployment. With many of the survey respondents in the early stages of RFID investment, the study revealed 25 percent of companies with US$5 billion in revenue will spend between $500,000 and $10 million on RFID adoption in 2004. The study also showed that RFID spending among smaller companies will be less. Though RFID has the clear potential to transform the retail supply chain through real-time product tracking and identification and elimination of human error, the industry is slow to embrace the new possibilities it offers.

Testing, conducted by Deloitte Touche Tohmatsu and Retail Systems Alert Group, also found that corporate culture and organizational structure has a sizable impact on active RFID-enabled innovation and future implementation of electronic product codes. To address this challenge, more than 75 percent of manufacturers and approximately 65 percent of transportation/logistic providers surveyed are implementing cross-functional teams to better integrate RFID solutions.

"There are two sides to every story and the retail RFID story is no exception," said Tom Friedman, president of Retail Systems Alert Group and founder of Retail Systems Conference & Exposition. "Everyone knows about the highly publicized efforts and mandates of Wal-Mart, Target, Tesco and Metro. But no one knows the other less vocal companies, who represent an equally compelling side of the RFID story."

The survey provides the most recent snapshot of how 90 retailers, distributors, CPG companies and apparel manufacturers view RFID adoption and innovation in the 2004-2005 timeframe, as well as provides initial insight into industry-wide investment and expectations for RFID in the next five years. Highlights include:

Nearly 72 percent of companies with annual revenue of $5 billion or more will spend less than $500,000 in RFID in 2004. The majority of the companies with lower revenues will also spend less than $500,000 on RFID this year;
Thirty percent of the respondents had very low expectations of increased revenue from RFID in the first five years of implementation. However, larger retailers expect a more significant return on investment from RFID adoption;
Seventy percent of large companies ($5 billion plus sales) will embark on RFID timelines and initiatives within the next 18 months;
Retailers, manufactures, and distributors can overcome the challenges of RFID adoption by taking the initiative to educate personnel about the true benefits of RFID, leading to a smoother adoption of the technology.

"Our analysis shows that RFID is a transformative technology for the retail and supplier industries with the capacity to synchronize business processes and efficiencies across the supply chain," said Ed Carey, Global Managing Director, Consumer Business, Deloitte Touche Tohmatsu. "Though the general industry expectation of increased revenues in the first five years of RFID implementation is low, it is only a matter of time before all industry participants realize its overarching benefit of supply chain visibility and improved business processes, which ultimately leads to an enhanced customer experience."

"Widespread interest in RFID shows its potential as catalyst for change in the retail industry," continued Carey. "However, members of the retail and CPG industries have only begun to get their feet wet — and they don’t want to jump into the pool too quickly."

About Retail Systems Alert Group Inc.
Retail Systems Alert Group is a global research and events company that has followed the advancements of technology applications within the retail, apparel and CPG industries since 1989. The company provides analysis and insight about a broad spectrum of issues and trends through publications, conferences and expositions, information services, special reports, and customized research.

About Deloitte
Deloitte Touche Tohmatsu is an organization of member firms devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual capital of 120,000 people worldwide, our member firms, including their affiliates, deliver services in four professional areas: audit, tax, consulting, and financial advisory services. Our member firms serve more than one-half of the world's largest companies, as well as large national enterprises, public institutions, locally important clients, and successful, fast-growing global growth companies.

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