Wal-Mart Backs Off Its RFID Plans

Retail giant Wal-Mart Stores Inc. (www.walmart.com) has done an abrupt about-face and cancelled plans to sell products with item-level radio frequency identification (RFID) chips embedded in them. Wal-Mart was to have begun a trial within a single Massachusetts store to sell RFID-tagged razor blades from Gillette Co. (www.gillette.com), which, like the retailer, is a major proponent of the next-generation technology.

As recently as June 2003 Wal-Mart announced a compliance program for its top 100 suppliers, which mandates RFID-compliant tags be put on all case- and pallet-level shipments to the retailer by January 2005. However, perhaps reacting to consumer watchdog groups' fears that the tags are an invasion of privacy, Wal-Mart has backed off its in-store trial.

“RFID at the product level is many, many years down the road for us,” Wal-Mart spokesperson Tom Williams told the Associated Press. For the immediate future, the retailer will concentrate its RFID plans on tracking inventory in its warehouses and distribution centers.

Wal-Mart's retreat from product-level tags mirrors a similar reversal this spring when garment maker The Benetton Group (www.benetton.com) announced its plans to purchase and fit 15 million RFID tags into its apparel. Those plans were almost immediately reversed, though, in the wake of limited — but quite vocal — consumer protests that the tags were an invasion of privacy (the presumption being that a person wearing clothes with such a tag could be traced just about anywhere).

The biggest flaw in that line of paranoia is that the tags are deactivated at the point of sale; nevertheless, both Benetton and now Wal-Mart have concluded that discretion is the better part of retail, opting to better educate consumers as to what is — and isn't —possible with current RFID technology.

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