Large and small retailers alike have always been faced with inventory control challenges. UPC barcodes that could be scanned were a marked improvement over manual systems, but they weren't a complete solution.
When RFID (Radio Frequency Identification) tags were introduced into the retail environment, there was great hope that this technology would, once and for all, provide foolproof inventory control.
Wal-Mart aims to see if that's the case. According to The Wall Street Journal, The world's leading retailer will begin using removable "smart tags" next month in an effort to track items such as individual pairs of jeans. It's a smart move from an operational standpoint, but privacy advocates are worried about what else the tags may reveal.
How the technology works: By scanning the tags with a hand-held scanner, Wal-Mart associates will learn which sizes and styles to replenish on store shelves, keeping tighter control of inventory. If using the tags with clothing is successful, Wal-Mart plans to roll out the system on other products in the company's U.S. stores.
The move is significant, because Wal-Mart is watched closely by other retailers. If this experiment works, competitors are sure to follow. In fact, The Wall Street Journal reports that J.C. Penney and Bloomingdale's are now testing their own smart tags on clothing. In Europe, the technology is already in use by retailers.
There is an interesting feature, however, to the smart tags that has some consumer privacy advocates worried.
The smart tags can be removed but not turned off, so when they are disposed, someone could theoretically find out what a consumer purchased by scanning their trash. Of larger concern, though, is the fact that workers who scan the tags in stores might also scan new forms of personal ID, such as driver's licenses, and then use that data to track purchases back to individual consumers without their knowledge.
"There are two things you really don't want to tag, clothing and identity documents, and ironically that's where we are seeing adoption," said one such privacy advocate, Katherine Albrecht, to the Wall Street Journal.
Albrecht, founder of a group called Consumers Against Supermarket Privacy Invasion and Numbering (aka CASPIAN) and author of a book called Spychips, has been railing against RFID technology for years and seems more than a tad paranoid about marketers' motives. As she comments to the Journal, "The inventory guys may be in the dark about this, but there are a lot of corporate marketers who are interested in tracking people as they walk sales floors."
Obviously, smart tag proponents think such concerns are unfounded. Sanjay Sarma, an MIT professor, tells The Wall Street Journal, "Concerns about privacy are valid, but in this instance, the benefits far outweigh the concerns."
Bill Hargrave of the University of Arkansas RFID Research Center (funded in part by Wal-Mart), adds, "We are going to see contactless checkouts with mobile phones or kiosks, and we will see new ways to interact, such as being able to find out whether other sizes and colors are available while trying something on in a dressing room. That is where the magic is going to happen. But that's all years away."
For its part, Wal-Mart is enthusiastic about the technology. Raul Vazquez, who oversees Wal-Mart stores in the western U.S., tells The Wall Street Journal, "This ability to wave the wand and have a sense of all the products that are on the floor or in the back room in seconds is something that we feel can really transform our business."