Customers’ RFID Privacy Concerns Result in Scale-Back

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 this 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 America, and where more government legislation exists to protect customer data, Metro AG and Tesco are much further along in RFID trials than are American 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 stored it in a database each time he picked a pack of blades off a shelf. -M.L.