Western European sales of radio frequency identification (RFID) systems are set to reach $1.1bn by 2007, according to market research published today.

The report by Juniper Research found that Germany and the UK will account for 40 per cent of the total European RFID market.

The most significant applications will be in the supply chain and logistics sectors, where RFID will be used to drive increased efficiencies from producer to retailer, the analyst firm predicted.

In the retail market success for RFID is expected to come from niche applications such as the library sector, and within mass transportation.

The study noted that agreement of standards such as EPC Gen-2 will be key to developing the market beyond today's limited trials.

Although Germany and the UK were identified as the leading growth markets, significant developments are also expected to take place in The Netherlands, Denmark and Switzerland.

The most likely solution for companies operating in the supply chain will be to implement a mobility solution comprising a hybrid of RFID technology plus a mobile element such as GPS or GSM, Juniper said.

"RFID in Europe is seen as a way of increasing business efficiencies," stated report authors Susan Griffin and Colin Williams.

"To date most trials have been in-house or between two trading partners, but as technology standards develop businesses will have the confidence to deploy it more widely across their supply chains."