The state of the global economy is delaying the deployment of RFID item-level tagging in the retail sector, new research has found, with growth being driven by apparel firms.

According to ABI Research, the technology is being deployed “very rapidly” in apparel and footwear markets, with item-level passive UHF tags now making up an increasing share of the total world market.

The company expects that more than 750m RFID tags will be used in global apparel markets in 2011.

“RFID systems allow apparel retailers to get a better handle on inventory, reducing costs and preventing out-of-stock situations that result in loss of sales,” said ABI Research principal analyst Bill Arnold.

“The growth in retail item-level tagging is huge, both in shipments and in total spending.”

ABI said RFID deployments by retailers like Macy’s, JC Penney and Wal-Mart should see a return on investment in three to six months, but the state of the global economy was creating “serious delays” in getting budgets allocated to such programmes.

“Executives are still very uneasy about business conditions and availability of credit, and while ILT systems are technically scalable right down to small businesses, credit will be the big limiting factor for smaller independent stores,” said Arnold.

ABI Research’s new study is entitled “The Retail Apparel RFID Item-Level Tagging Market”.