Radio frequency identification (RFID) technology has been around for more than 50 years, but it wasn't until Wal-Mart and the US Department of Defense began rolling out mandates in late 2004 that companies began using RFID labels in earnest, which had previously been seen as too costly. However, many converters were slow to jump on the RFID bandwagon, questioning the economic viability and the return on investment.

That was two years ago. Today, more and more converters are exploring the RFID landscape to meet their customers' demands. “In the recent past, typical label printers offering RFID were large corporations with ties to leading supermarkets,” says Al Spendlow, vice president of operations for AB Graphic International, Inc., a manufacturer of RFID label converting equipment (www.abgint.com). “Now, smaller label printers have entered the fold, supplying much lower volumes to niche markets.”

And the future continues to look bright as materials and equipment continue to improve, increasing the reliability of the inlays and finished labels, driving down unit costs. “The end users of the label and packaging materials will demand further usage,” Spendlow adds. “One of our client label manufacturers using (AB Graphic's) Omega converting systems reported sales of RFID labels to be typically 500,000 per week. The same manufacturer stated that this was twice the amount produced 12 months earlier, and volume is continuing to rise steadily.”

AB Graphic's customer's experience is no longer an exception. The US smart-label industry, which includes electronic article surveillance (EAS), RFID and interactive packaging labels, will no longer be dominated by EAS labels but rather by RFIDs. According to The Freedonia Group, Inc. (www.freedoniagroup.com), an industrial market research firm, RFID labels will account for more than 85 percent of smart-labels demand by 2014. Two years ago, RFID made up only 10 percent of total smart-labels sales.

Growth will be triggered by improvements in identifying objects, information storage capacity, interfacing with computer systems and the non-line-of-sight reading capability that RFID has over bar codes, Freedonia says. “As a result, many observers are predicting that the widespread deployment of RFID labels will lead to what is known as the 'Internet of things',” Freedonia adds. “This massively connected network or group of networks will enable computers to automatically recognize and identify everyday objects, and then track, trace, monitor, trigger events and perform actions on those objects. At its most ambitious, the Internet of things will create communication and interoperability among virtually all products and individuals.”

According to Freedonia's report on smart labels, as the RFID market develops over the next several years, US demand for smart labels is projected to increase more than 11 percent annually to 8 billion units in 2009. With the advent of item-level RFID tagging on higher-priced items early in the next decade, demand will grow even more sharply to 50 billion units in 2014. While the fastest increases are expected for RFID labels, interactive packaging labels, which includes thermochromatic and time-temperature indicator products, will also see strong growth.

Across the pond, demand for RFID labels is also increasing as UK-based retailer Marks & Spencer recently announced that it will extend its item-level RFID tagging from 42 to 120 stores next spring, reports RFID Update (www.rfidupdate.com). The garment-tracking system will include “size-complex items such as suits, casuals and separates,” said a M&S spokesperson. “By looking at size-complex items and improving the stock-taking process, we can improve product availability.”

Mobile readers on the shop floor and fixed-position readers at the loading bays and distribution centers scan garment tags, take daily inventories and trigger replenishment orders.

Initially the 869.5 Mhz RFID tags were in throwaway paper labels. This year, M&S began integrating the tags into existing bar code labels. M&S has distributed 35 million tag items to date, but have not determined how many will be deployed in the next phase.

In order to avoid privacy issues, like the controversy that greeted similar pilots in the US, M&S consulted with CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering) and made customer disclosure a key part of the trial. The RFID labels were marked as “intelligent labels” and explanatory brochures were made available.

M&S will continue to work with the converter from the initial trial, Paxar of White Plains, NY, which supplies the labels that include chips from Switzerland's EM Microelectronic.

Clearly, there is plenty of opportunity for converters to get in the market as the demand for RFID labels continues to increase. For instance, sales of active RFID systems, including the tags and labels, is predicted to grow from $550 million this year to $6.78 billion in 2016, according to Dan Lawrence from IDTechEx (www.idtechex.com), a knowledge-based consultancy providing research and analysis on RFID, printed and organic electronics and smart packaging.

“Active RFID has recently been moving to the forefront as open standards enable widespread confidence to adopt the technology and as the technologies improve and decline in cost,” Lawrence adds.

Now that there's a better understanding of available technology and a subsequent reduction in cost, converters are seeking out suppliers to learn more about RFID and other brand-protection options to offer their clients, says Jack Walsh, market manager, brand protection solutions for Videojet Technologies, Inc. (www.videojet.com). “I think converters will miss out if they don't invest in security,” Walsh says. “They have to differentiate themselves, and they're in the best position to capture the (RFID and brand security) business.”

How best to proceed? Walsh suggests that converters make a commitment and invest in the technology. “Be willing to bring (technology) in, research it and be prepared to sell it,” he adds. One way to add technology that is not a capital-intensive investment is to bring in specialty inks because converters already have the printing expertise and capability. “At that point, they can offer security features to their package and get in the game,” Walsh says. “It's not the end-all, but it will get them into the game.” Investing in specialty inks, like the ones used for printing RFID antennas, also gives converters another doorway into the RFID field.

Once the decision to enter the RFID field is made, “[Converters] must be experts at it so whatever the customer wants, they can tailor the solution,” Walsh adds. Avery Dennison RFID (www.rfid.averydennison.com) offers a multimedia training tool called RFID 101, which combines a live narrator with animation, photos and video to walk the viewer through the history of RFID, technology basics, applications and markets, system components, RFID-label converting, and tag testing and quality.

“We produced RFID 101 to help folks get up to speed quickly on RFID without spending a lot of money,” says George Reynolds, vice president of sales and marketing at Avery Dennison RFID. “We understand RFID is a complex subject, and this presentation covers all the basics.”