CONNECTICUT SKYWATCH


EXPOSING THE WHITE-WASHING OF CONNECTICUT

I opened one of these heavy tags after removing it from my child's clothing and thought it was a security sensor, there was nothing on the tag except instructions to remove it before washing. Now, I know these have the ability to track us all the way home!

Wal-Mart Radio Tags to Track Clothing

by Miguel Bustillo

Friday, July 23, 2010

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Wal-Mart Stores Inc. (WMT- News)plans to roll out sophisticated electronic ID tags to track individual pairs ofjeans and underwear, the first step in a system that advocates say bettercontrols inventory but some critics say raises privacy concerns.

Starting next month, the retailerwill place removable "smart tags" on individual garments that can beread by a hand-held scanner. Wal-Mart workers will be able to quickly learn,for instance, which size of Wrangler jeans is missing, with the aim of ensuringshelves are optimally stocked and inventory tightly watched. If successful, theradio-frequency ID tags will be rolled out on other products at Wal-Mart's morethan 3,750 U.S. stores.

"This ability to wave the wandand have a sense of all the products that are on the floor or in the back roomin seconds is something that we feel can really transform our business,"said Raul Vazquez, the executive in charge of Wal-Mart stores in the westernU.S.

Before now, retailers includingWal-Mart have primarily used RFID tags, which store unique numericalidentification codes that can be scanned from a distance, to track pallets ofmerchandise traveling through their supply chains.

Wal-Mart's broad adoption would bethe largest in the world, and proponents predict it would lead other retailersto start using the electronic product codes, which remain costly. Wal-Mart has climbedto the top of the retailing world by continuously squeezing costs out of itsoperations and then passing on the savings to shoppers at the checkout counter.Its methods are widely adopted by its suppliers and in turn become standardpractice at other retail chains.

But the company's latest attempt touse its influence—executives call it the start of a "next-generationWal-Mart"—has privacy advocates raising questions.

While the tags can be removed fromclothing and packages, they can't be turned off, and they are trackable. Someprivacy advocates hypothesize that unscrupulous marketers or criminals will beable to drive by consumers' homes and scan their garbage to discover what theyhave recently bought.

They also worry that retailers willbe able to scan customers who carry new types of personal ID cards as they walkthrough a store, without their knowledge. Several states, including Washingtonand New York, have begun issuing enhanced driver's licenses that contain radio-frequency tags with unique ID numbers, to make border crossings easier forfrequent travelers. Some privacy advocates contend that retailers couldtheoretically scan people with such licenses as they make purchases, combinethe info with their credit card data, and then know the person's identity thenext time they stepped into the store.

"There are two things youreally don't want to tag, clothing and identity documents, and ironicallythat's where we are seeing adoption," said Katherine Albrecht, founder ofa group called Consumers Against Supermarket Privacy Invasion and Numbering andauthor of a book called "Spychips" that argues against RFIDtechnology. "The inventory guys may be in the dark about this, but thereare a lot of corporate marketers who are interested in tracking people as theywalk sales floors."

Smart-tag experts dismiss BigBrother concerns as breathless conjecture, but activists have pressuredcompanies. Ms. Albrecht and others launched a boycott of Benetton Group SpAlast decade after an RFID maker announced it was planning to supply the companywith 15 million RFID chips.

Benetton later clarified that it wasjust evaluating the technology and never embedded a single sensor in clothing.

Wal-Mart is demanding that suppliersadd the tags to removable labels or packaging instead of embedding them inclothes, to minimize fears that they could be used to track people's movements.It also is posting signs informing customers about the tags.

"Concerns about privacy arevalid, but in this instance, the benefits far outweigh any concerns," saysSanjay Sarma, a professor at the Massachusetts Institute of Technology."The tags don't have any personal information. They are essentially barcodeswith serial numbers attached. And you can easily remove them."

In Europe some retailers put thesmart labels on hang tags, which are then removed at checkout. That stillprovides the inventory-control benefit of RFID, but it takes away otherimportant potential uses that retailers and suppliers like, such as being ableto track the item all the way back to the point of manufacture in case of arecall, or making sure it isn't counterfeit.

Wal-Mart won't say how much itexpects to benefit from the endeavor. But a similar pilot program at AmericanApparel Inc. in 2007 found that stores with the technology saw sales rise 14.3%compared to stores without the technology, according to Avery Dennison Corp., amaker of RFID equipment.

And while the tags wouldn't replacebulkier shoplifting sensors, Wal-Mart expects they'll cut down on employeetheft because it will be easier to see if something's gone missing from theback room.

Several other U.S. retailers,including J.C. Penney and Bloomingdale's, have begun experimenting with smartID tags on clothing to better ensure shelves remain stocked with sizes andcolors customers want, and numerous European retailers, notably Germany's MetroAG, have already embraced the technology.

Robert Carpenter, chief executive ofGS1 U.S., a nonprofit group that helped develop universal product-codestandards four decades ago and is now doing the same for electronic productcodes, said the sensors have dropped to as little as seven to 10 cents from 50cents just a few years ago. He predicts that Wal-Mart's "tippingpoint" will drive prices lower.

"There are definitely costs.Some labels had to be modified," said Mark Gatehouse, director ofreplenishment for Wrangler jeans maker VF Corp., adding that while Wal-Mart issubsidizing the costs of the actual sensors, suppliers have had to invest innew equipment. "But we view this as an investment in where things aregoing. Everyone is watching closely because no one wants to be at a competitivedisadvantage, and this could really lift sales."

Wal-Mart won't disclose what it'sspending on the effort, but it confirms that it is subsidizing some of thecosts for suppliers.

Proponents, meanwhile, have highhopes for expanded use in the future. Beyond more-efficient recalls and lossprevention, RFID tags could get rid of checkout lines.

"We are going to seecontactless checkouts with mobile phones or kiosks, and we will see new ways tointeract, such as being able to find out whether other sizes and colors areavailable while trying something on in a dressing room," said BillHardgrave, head of the RFID Research Center at the University of Arkansas,which is funded in part by Wal-Mart. "That is where the magic is going tohappen. But that's all years away."

Write to Miguel Bustillo at miguel.bustillo@wsj.com