Item level tagging by retailers like Walmart is driving growth of RFID technology in retail to new heights. The global RFID market in retail is expected to expand from $439.4 million in 2010 to more than $3.2 billion by 2015, representing annual growth of 49 percent.

According to an executive brief released by VDC Research, the growth will be driven primarily by the continued adoption and scaling of EPC Gen2 item-level tracking solutions in supply chain and inventory management applications in the fashion, apparel, luxury goods and accessories market.

In addition, several emerging CPG categories like tobacco, liquor, and consumer electronics are expected to bolster retail activity as these tagged products make their way to the retail floor. Automotive parts and pharmaceuticals are also expected to contribute to the growth.

Retailers rely on RFID for better supply chain visibility and inventory accuracy, which leads to increased sales on the retail floor. In addition, RFID 24-7 has reported that retailers stand to see additional sales gains by integrating RFID with social media apps.

The VDC report states that the U.S. became the largest consuming region for RFID in retail in 2010, largely due to the increased commitment and scaling of item-level solutions by Wal-Mart, JC Penny, Levis and Target. Wal-Mart’s initiative alone accounted for approximately 400 million tags and 20,000 readers in 2010. Although the reader volume is not expected to increase as dramatically in 2011, the tag volume is anticipated to grow by more than 50% and reach 650 million tags, despite the delay Walmart experienced in the tagging of additional women’s apparel items in Q1 2011.

Click here to view the full executive briefing.