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Packaging expected to see strong growth in RFID technology businesses

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AIPIA member Avery Dennison provided a comprehensive update regarding its radio frequency identification (RFID) initiatives at its third-quarter earnings conference call held in October. The company expects its RFID-related revenue to grow by 20 per cent this year, thanks to new business from European retailers.

Avery Dennison's chairman, president and CEO, Dean A. Scarborough said that the company will be targeting continued strong growth for this $100 million part of the business over the next few years. He explains that the value proposition is all about inventory management with retailers seeing good ROI from their RFID implementations.

Avery Dennison is currently working on new rollouts for significant expansions of existing programs with seven major retailers across multiple market segments.

Scarborough noted that the Retail Branding and Information Solutions (RBIS) division that provides RFID tags and services experienced some slowdown in the rate of orders for certain segments among US-based retailers. The department store segment and the mass-merchandising segment were softer than expected, but good performances were achieved in fast fashion as well as the performance athletic segments of the market. The company performed very well in Europe across most segments where a number of RFID programs were stronger than had been expected.

Scarborough observes it is no longer a case of RFID’s acceptability, but increasingly about how fast and how widely the technology will be adopted.

Speaking about the seven major retailers planning new rollouts and whether those firms are using RFID to track both low- and high-priced apparel, as well as the ROI case for these deployments, Scarborough said there were three important factors that retailers consider: price, complexity of the SKU sets, and replenishment rate. Retailers tend to start in certain departments, get the ROI, and then get some other incremental benefits in other areas as they move forward.

The Australian Packaging and Processing Machinery Association (APPMA) represents the packaging and processing machinery industry in Australia.

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