RFID Investment Will Grow, But ROI Will Take Time - InformationWeek

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5/18/2004
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RFID Investment Will Grow, But ROI Will Take Time

A study released at the Retail Systems 2004 conference found that more than a quarter of those surveyed will spend more than $500,000 on RFID this year, but payback will take some time.

Big companies will be investing lots of money into radio-frequency identification technology in the next year. But they shouldn't expect immediate returns, according to a study released Monday at Retail Systems 2004, a retail industry conference in Chicago.

The study found that nearly 72% companies with $5 billion in revenue or more will spend less than $500,000 this year on RFID, while companies with lower revenue also will spend less than that amount. But at least a quarter of the bigger companies will spend at least $500,000--and some will invest as much as $10 million--on RFID adoption in 2004. The study, conducted by professional services firm Deloitte Touche Tohmatsu, RFID consulting group ePC Group, and Retail Systems Alert Group, a research and events company, queried 90 retailers, distributors, consumer packaged-goods companies, and apparel manufacturers.

As other surveys have suggested, RFID payback may take some time. In all, 30% of 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.

RFID will be a core focus of Retail Systems 2004, and IT executives attending the conference will have plenty of opportunities to hear real-world stories from companies that are already testing the technology.

Michael Duke, executive VP, president, and CEO of Wal-Mart Stores Inc.'s USA division, will kick off the conference with a keynote speech discussing the rationale behind his company's decision to require its top 100 suppliers to tag all cases and pallets they ship to the retailer by January 2005.

Following his keynote, a group of IT execs well-versed in real-world RFID implementations will share their stories, including Linda Dillman, executive VP and CIO at Wal-Mart; Paul Singer, senior VP of technology services and CIO at Target; Dick Lampman, senior VP of HP Research and director of HP Labs at Hewlett-Packard; and Mike O'Shea, director of AutoID and RFID strategies and technology at Kimberly-Clark.

Meanwhile, there will be more RFID information coming out of the Northeast. MIT is hosting a conference titled "eBusiness is Business" and a CIO Symposium this week. Auto-ID Center co-founder Sanjay Sarma will talk about the impact of RFID at Tuesday's keynote, and there will also be a panel that day with such RFID proponents as Gillette Co.

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