The intelligent labels and packaging space continues to evolve, as industry leaders pioneer new technologies that will dramatically change the consumer experience for years to come.

Francisco Melo, vice president and general manager, Global RFID for Avery Dennison, recently sat down with Label & Narrow Web to discuss his company’s endeavors in this field, as well as where he sees the market heading in the future.

L&NW: How viable is the smart labels market globally?
FM: Over the years, I think we’ve seen an understanding of the true benefits of the technology. People realize it brings a great potential. It allows us to rethink the distance involved, with high read-rate speeds, extreme accuracy and low labor. It’s taken the industry quite a few years to understand the sweet spots, and much of the momentum comes in apparel. The use of RFID technology has significantly grown in apparel and footwear.

We see customers understanding why having these intelligent products at item level has value and what that value is. We now see a number of other industries looking into this space and asking, ‘What value will it bring to us?’ This is a viable market, and we fundamentally believe so because the products add value and provide the ability for people in the space – converters – to truly up their game. They not only provide the label but content that is an extension of a brand or retailers. That is an element that is really helping bridge the gap between the physical and digital space.

L&NW: Why would brands adopt this technology, and what does Avery Dennison offer in this space?
FM: The whole concept behind why our customers, who are brands and retailers, are adopting our technology is to improve the consumer experience. Think about when you used to go to the store and looked for an item and couldn’t find it because the inventory accuracy was below 65% – and there are studies that demonstrate that. This comes at the item level – the SKU level – where you think you have a certain number of a certain size, and you don’t have the product in stock. That whole logic of accuracy has been what’s driving the use of RFID in stores.

Consumers today, certainly the millennials, won’t go into a store if they don’t know they have the item they’re looking for. They check the availability on their phone, and if the store has it, then the customer is probably going to go there to check the fit, touch and feel. Consumer experience is really the fundamental metric about how we work with customers, learning how we can improve upon that and build up the ROI.

For our Avery Dennison location in Miamisburg, Ohio we’ve really tried to showcase RFID solutions across different segments.

We have tremendous experience in the entire apparel space, so we’ve specifically designed inlays that are optimized for apparel. You have to ensure that you design an inlay that performs well when it’s applied to certain materials and environments

Two, on the foods side we’ve launched UHF RFID innovations that are microwave safe, which is a fundamental concern for retailers who wish to tag frozen packed foods as well as ensure consumer safety. Additionally, in the beauty space there are a number of developments where RFID efficiently and accurately manages complex SKU and color variations and minimizes losses, where there are a lot of liquids and a lot of metalized packaging.

We also offer time and temperature sensor technology like TT Sensor Plus. Plus, a number of NFC innovations targeting specific segments.

L&NW: What are factors that will affect adoption in the near future, and how do you characterize growth?
FM: There are two sides to it. One is the range, where RFID is a one-to-many technology with high capabilities and high performance, where it can capture hundreds or even thousands of items in a relatively small area.

Retail is growing very significantly, and apparel is in its early stages. The apparel market is below 10% penetration worldwide, so there’s still a long way to go. We’ve had discussions with our customers and most people see the benefits and our role is to support and bring the right solution for the right market.  So, the conversation has changed. We will continue to see growth. As you unlock other segments, like food, beauty and aviation, and identify what the ROI is, you get the industry to start talking and then you’ll see consistent adoption.

On the flip side, there’s the NFC discussion. Near-field communication has been used in payment and the identification space because of secure elements. It confirms that it’s you making your payment and not someone else. You have secure elements, where you make sure it’s your Apple phone tapping on the pay button. That potentially will have some growth, but we still have to see how it will grow. Apple just unlocked the ability to read NFC, which in itself probably provides the consumer greater levels to interact. There is more to come there, though.

The follow-up to this story can be found here.