The Smart Label Market is expected to grow at a CAGR of 15.12% over the forecast period (2021-2026). Smart labels are becoming one of the most popular technologies across the retail, healthcare, and logistics sectors, and are viewed as an ideal means to achieve greater efficiencies and profitability while providing the authenticity of an item and its traceability from the warehouse to the distribution center throughout the supply chain.
- The behavioral changes that have arisen due to COVID-19 have brought a higher interest for safe and traceable food on e-commerce platforms and raised public consciousness of health and safety in general. According to an IBM study, 71% of consumers are ready to pay an additional average premium of 37% for companies providing full transparency and traceability. While the food supply chain is one of the most complex and fragmented supply chains, 70% of firms have "visibility gaps" between the initial supplier and internal clients' systems.
- These labels are used as a tool to enable smart supply chains and are also playing a vital role in the marketing and advertising of consumer products. This can be achieved through the provision of product information, as well as the analysis of consumer buying patterns that can be accessed from the data collected by these labels. Cost-cutting over the supply chain, to be closer to the nearest level of efficiency, by manufacturers, has been a critical factor that has augmented the demand and prompted the proactive adoption of these solutions to gain the first-mover advantage in the individual end-user industry.
- Moreover, increasing customer spending patterns and rapid internet penetration are directly influencing the expansion of e-commerce. Thus, consistent demand for smart labels is likely to be generated by e-commerce for product tracking and tracing. To benefit the most out of this scenario, leading smart label manufacturers are launching advanced label solutions, particularly for the e-commerce sector.
- The ability of a smart label to withstand harsh climatic conditions during shipping and exposure to sunlight plays an important role, due to the dissolving nature of solvents used during printing. The labels should have the ability to face tough conditions during shipping, storage, or point-of-use, as many labels are subject to damage when exposed to sunlight, chemicals, dirty, or wet environments.
Key Market Trends
Electronic Article Surveillance (EAS) Technology is Expected to Drive the Market Growth
- Electronic article surveillance (EAS) has the primary application of surveillance against shoplifting from retail stores, pilferage of books from libraries, and property removal from office buildings. In addition, this technology increases merchandising capability, deters theft and burglary, and can lessen stock losses by up to 85% (According to the Multi-color Corporation).
- Sites with high efficacy for EAS labels are libraries, apparel and footwear, health and beauty, and food and beverage. They offer a positive shopping experience and maximum protection. The system under this technology usually consists of three components, namely the electronic antenna, deactivator or detacher, and an electronic tag.
- Printed electronics solutions are expected to play a substantial role as a straightforward means of providing surfaces with electronic functions while facilitating data transmission. Furthermore, smart labels based on EAS technology are currently being developed.
- Shoplifting across several countries has reportedly been a problem to tackle. For instance, according to National Retail Federation July 2020 report, the average dollar loss per shoplifting incident in the United States in 2019 accounted for USD 270.06. Also, According to an Annual Retail Theft Survey by Jack L Hayes International, 66.7 percent of retailers indicated an increase in inventory shrinkage in 2019, with the major reason being shoplifting.
North America Holds the Significant Market Share
- North America is the largest market for smart labels globally, with the United States accounting for a significant region share. The country's huge market can be attributed to the vast presence of retail stores, both small and big.
- Retail giants, such as Walmart, lead the United States. This is driving the upsurge in activity, mainly contributing to smart labels' growth in the country. Walmart has been placing electronic identification tags on men's clothing, like jeans, as the retailer tries to gain more control over its inventory.
- Furthermore, the CVS pharmacy, a pharmaceutical outlet in the US, announced the new RFID pharma label in 2020, which is supported by Spoken Rx application that can be accessed by users using Siri or google to enable the reading out loud feature for prescription label information making it easy for the consumers of the pharmaceutical market and prevents them from reading the prescriptions printed in small letters in all the medicine packaging.
- The USDA and FDA (Food and Drug Administration) have announced a framework agreement to label cell-based meats and potentially other food products. This is expected to augment the size of the market in the United States. Moreover, companies in the country are investing in technologies that drive greater traceability throughout their supply chains, with blockchain being increasingly used, along with smart labels.
The smart label market is estimated to be fragmented due to the presence of established and emerging vendors that are leveraging the presence of a large number of smart label suppliers. These companies are leveraging strategic collaborative initiatives to increase their market share and increase their profitability. Customization is a key factor in the differentiation of the products offered by the various vendors of the market. Thus the players focus on innovation to attain a competitive edge over the other players. Some of the recent developments in the market are:
- November 2020 - Saanbuy Inc introduced the SmartLabel tool in Canada. The tool gives the consumers complete access to detailed information about the products by scanning the QR code printed on the packages.
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