Benetton backpedals on radio frequency tags

Clothing maker Benetton has clarified its plans regarding radio tags in response to reports that it is preparing to sew millions of the tiny devices in the company’s products to help track inventory.

The company has officially stated that it has purchased only 200 radio frequency identity (RFID) chips to date and is still deciding whether or not it will use controversial technology to track its products.

Benetton has completed technology tests of radio frequency identification to help improve its supply chain management. However, the clothing maker is still testing the economics of RFID and whether it is cost-efficient to replace the barcode-scanning technology it now uses.

The quick backpedal clarification comes after Philips Semiconductor, a division of Philips Electronics, said in March that it would ship 15 million radio tags for use in Benetton’s Sisley line of clothing. The chipmaker announced it was working with system integrator Lab ID and Psion Teklogix to create shelves and mobile devices to bring RFID technology to Benetton.

The use of RFID allows a company to upload inventory information more quickly and easily to its tracking system and eliminates the need to have to scan a bar code each time a product is moved to a different point in the supply chain — potentially increasing order accuracy and reducing labor costs. For example, a company using the technology could track a box containing clothes of varying styles, colors and sizes all at once, as opposed to scanning or manually checking one piece at a time.

Despite the obvious merits, the ability to track a product’s movement, and possibly the movements of a consumer, has raised the alarm among privacy advocates. At issue is the fear that with RFID tags, it becomes technically possible for marketers to obtain invaluable information on a host of consumer preferences, ranging from the clothes they like to the food they prefer.

And even though Philips asserts that the technology is intended to be disabled at the point of sale, just like a security tag, there are worries that such a technology could be exploited for government surveillance or misused by hackers and criminals.

As a result of the fears, CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering) has called for a worldwide boycott of Benetton.

SNEWS View: RFID is being touted as the future for inventory tracking by many in the manufacturing and technology sector with the assertion that the technology could save retailers and manufacturers millions of dollars annually. Gillette, Wal-Mart Stores and U.K.-based supermarket chain Tesco are reportedly already working to install specially designed shelves that can read radio frequency waves emitted by microchips embedded in millions of shavers and related products. It is likely that Benetton will move forward with the technology as well.

Though privacy concerns are real, the technology itself has a very limited frequency range — 3 feet — making it very difficult for anyone to abuse the technology even if it is not disabled at the point of sale. It is left up to the retailer to disable the chip currently, which does open up the debate a bit since that makes it more likely active chips will remain in products after they have left the retail environment.

Currently, the estimated cost of the tags (Philips will not confirm the prices publicly other than to say it depends on the order amount) range between 25 cents and 50 cents, too high an additional price to add the technology to products costing less than $15.

As for retailers embracing RFID, the benefits are greatest for those companies that integrate retail with manufacturing — REI for example. However, other retailers could certainly realize significant savings and probable sales increases simply by improving order accuracy, in-store inventory management and product availability through the use of the technology.