RFID in 2006: A Story of Extremes

Basically, the RFID tagging of pallets and cases for major Western retailers of under 400 million pallets and cases over two years has already improved their margins by up to $100 million. This was provided at a loss of about $100 million by the consumer goods companies that supply them. In addition, the RFID suppliers to these consumer goods companies also lost about $100 million in the exercise. In the case of the RFID suppliers, that money came from investors and parent companies. It was certainly not predicted that those investments in RFID companies would, in effect, flow rapidly to the large retailers. System integrators are faring better, with some even claiming to make money installing pallet/case RFID infrastructure at CPG companies and retailers. At least with anti-theft tags earlier mandated by retailers, the tag and system suppliers to the mandated CPG companies - notably Sensormatic (now in Tyco-ADT) and Checkpoint Systems - stayed profitable because they did not price for volumes that never came. However, anti-theft tags did and still do cost the CPG companies heavily for no return and pallet/case RFID is history repeating itself.