Clothes retailer Benetton will soon start attaching radio frequency identification (RFID) "smart tags" to its Sisley clothing line to help track shipping, inventory and sales in the chain's 5,000 stores around the globe. But some observers have drawn attention to privacy issues surrounding the technology.
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Royal Philips Electronics said the tags will use its I.CODE semiconductor technology, which will be integrated into clothing labels made by LAB ID and scanned by handheld devices made by Psion Teklogix.
Terry Phipps, consulting CIO of Benetton, said today that this is the first time his company has planned to integrate the tracking technology into one of its clothing product lines to help watch over its supply chain.
He said the system will allow Benetton's 5,000 independently owned stores in 120 countries to speed order unpacking by scanning incoming boxes that use RFID-embedded shipping labels, then enter the new merchandise quickly into the store's inventory at the touch of some buttons on a handheld device. Since only Benetton stores sell the company's products, the problem of tag compliance from other vendors is avoided, making the control of the supply chain a certainty, he said.
"This is a huge savings for our [store owners]," Phipps said. "It makes the management of the shops that much more efficient."
The RFID tags are printed directly onto the clothing labels and feature a printed "antenna" and a semiconductor chip that's about 1mm square in size. "It's very discreet," he said.
Benetton sells about 120 million garments per year, while production of the RFID labels includes only about 80 million tags per year, making a transition to full implementation unlikely before 2004, Phipps said. "We want to go step by step" and be sure the system is working and that store owners are satisfied, he said.
The tags will include information about the colour, quantity and size of the garments, as well as the date of manufacture. But when the items leave the stores, the RFID labels will be disabled, Phipps said, so that they can't infringe on the privacy of customers.
"Once a garment is sold, it's not part of your inventory anymore," he said. "It's not your property anymore. There's no client information, no final customer information that is attached in any way, shape or form."
Dirk Morgenroth, marketing manager of tags and labels at Philips Semiconductor Division, which makes the I.CODE chips for the RFIDs, said other retailers have been doing trials with the technology to possibly incorporate it into their systems.
This year, Morgenroth said he expects about 15 million Benetton Sisley brand garments to go out the factory doors with RFID tags.
"It is, as far as we can tell, the largest RFID project" so far, he said. The chips being embedded cost a few pence and are read-write chips with 1KB of memory.
Peter Abell, an analyst at AMR Research, said the Benetton implementation of the RFID devices is "the tip of the iceberg" for similar deployments.
"The apparel people are all actively looking at it to put it into footwear or apparel" to improve goods tracking, reduce theft and improve inventory control and monitoring in stores, Abell said. "It [provides] very substantial benefits ... for closed loop supply chains."
Privacy groups remain wary of the technology, but say that done openly and with full disclosure to customers, it can be acceptable.
Mihir Kshirsagar, a policy analyst at the Electronic Privacy Information Center in Washington, said his group has been watching the development of RFID systems and the "potential for privacy invasion is significant."
"Companies need to take positive steps to assure their customers that this information is not being misused," Kshirsagar said. One way to do that will be to disable the devices after they are sold and before they leave the stores, and make it clear to the customers what is being done, he said.
But if the devices allow companies to obtain information without customers knowing it, that would be troubling, he said.
"RFIDs are to a certain degree like bar codes," Kshirsagar said. "If it's used as a bar code is today, then that's not going to create a problem."