SIDEBAR: Customers to Retailers: Take Us Seriously

Privacy advocates turn up the pressure

Few CIOs believe privacy concerns will derail RFID technology. They argue that RFID tags can be disabled in a variety of ways, including a device that can render the tag permanently inactive through a "kill command" once it has served its purpose. They point out that because most tags don't have a read-range beyond a metre, they'd be pretty useless for snooping or tracking. (Of course, that range will grow. In fact, readers in tests already have picked up signals from as far as 10 metres away.)

But these arguments don't wash with Katherine Albrecht, founder and director of Caspian (Consumers Against Supermarket Privacy Invasion and Numbering). The issue, she argues, is that readers can be hidden, and personal objects - be they clothing or breath mints - can be detected on a person without their knowledge and, of course, without their permission. That, she says, is an infringement on privacy. People, Albrecht maintains, ought to have a say in whether they want their items tagged, and they should definitely be informed of the presence of readers.

About 78 per cent of people polled by the Auto-ID Centre at MIT agreed with Albrecht. (This Internet-based survey was confidential and released only to Auto-ID Centre sponsors. CIO US obtained a copy through Caspian.) "When 78 per cent of people get together and lobby on this, you're going to see legislation," Albrecht says. "The message to retailers is tread with caution."

At least one company is doing just that. UK-based retailer Marks & Spencer reached out to Caspian for help in finding ways to prevent RFID abuses. While Caspian does not support the item-level trial Marks & Spencer is planning, Albrecht says the company is "doing a bang-up job addressing privacy concerns". It's not, for example, putting RFID readers in any public spaces, such as parking lots, and it's not hiding them. It's using portable readers that can be rolled into a back room once the store closes. Marks & Spencer is also not building readers into shelves, so there's no in-store surveillance.

If retailers fail to consider these concerns, they may end up wasting money on pilots and deployments if legislation passes preventing item-level tagging. However, if retailers take these issues seriously, they'll reduce the risk of the government banning item-level RFID, and they'll be prepared to leverage the technology when the time is right.

SIDEBAR: Retailers to Customers: Oops, Never Mind

Some companies have second thoughts about RFID

Public concern about RFID technology's potential for compromising consumer privacy recently caused some retailers to scale back their plans.

Last March, Royal Philips Electronics announced that it would provide Benetton, the retailer that has always marketed itself as socially conscientious, with RFID-enabled "smart labels" to put in its clothing. Philips also announced that clothing manufactured under Benetton brand Sisley already had been fitted with RFID-enabled labels. For Benetton, which has been hurting financially for the past several years and has gone through several management changes, RFID held the promise of helping the company win back shareholder confidence by improving supply chain efficiency.

Within days of Philips's announcement, privacy advocates were organizing a boycott. Three weeks later, Benetton released a statement denying that any of its clothing had been tagged and declaring that it had not undertaken any studies in preparation for an RFID rollout. The company has since declined to discuss its RFID plans.

Wal-Mart and Gillette also scaled back an RFID pilot last year after encountering negative public reaction. The companies had planned to tag individual packs of razors. Brett Kinsella, general manager of the supply chain management group for IT consultancy Sapient, says that Wal-Mart and Gillette did not cancel the RFID pilot because of PR concerns but because of the "hurdles, both technical and organizational, that make [item-level tagging] a harder implementation to do in the near term," he says.

Ironically, in Europe, where citizens and corporations are more concerned with personal privacy than they seem to be in the US, and where more government legislation exists to protect customer data, Metro AG and Tesco are much further along in RFID trials than are US retailers. In spite of protests outside their stores, they've already implemented RFID at the pallet and case level. Metro AG has started to tag some items in select stores in Germany, and Tesco undertook a controversial pilot involving tags on Gillette razor blades in conjunction with closed-circuit TV cameras on shelves. The cameras would snap a photo of a consumer and store it in a database each time he picked a pack of blades off a shelf.

SIDEBAR: RFID All-Stars: The Best of the Best

Leading the pack in terms of RFID implementations

TESCOIntroduced RFID inside its warehouses in 2002 and began putting the technology in shelves inside stores this past summer.

MARKS & SPENCERBegan using RFID inside its warehouses in 2002. Currently planning an item-level pilot.

METRO AGOpened a store in Rheinberg, Germany, in April 2003, that uses RFID technology as its IT backbone. Intended to represent the future of retailing and to test new technologies under retail conditions.

WAL-MARTPlans to have RFID readers in all of its distribution centres and more than 2900 stores by January 2005.