Wal-Mart Stores Inc. will not track inventory by selling products tagged with tiny computer chips, a technology that one day could allow retailers to “follow” merchandise from the store shelf into a customer’s home.
Wal-Mart, the world’s largest retailer, and Gillette Co., the world’s largest shaving-supplies maker, had planned to conduct a “smart shelf” trial at a Wal-Mart store in Brockton, Mass., this summer.
Under the plan, Gillette would have embedded microchips in the packaging of its products sold in the store. The chips would have transmitted data to the store’s managers, allowing them to know if its stock of the Gillette products was running low.
The chips would have been part of a radio-frequency identification system, called RFID, the same technology that opens office doors for employees who carry “smart ID” cards and allows motorists with an “EZ pass” tag to breeze through highway toll plazas.
Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), an industry-watchdog group, organized a letter-writing campaign against Wal-Mart after the retailer confirmed plans for the trial last month.
Several hundred e-mails were sent to the retail giant, according to Katherine Albrecht, the group’s founder and director.
Earlier, CASPIAN called for a worldwide boycott of Italian clothing making Benetton when it announced plans to attach RFID chips to its clothing. Benetton later abandoned the program.
Wal-Mart did not bow to pressure when it shelved its smart-shelf trial plans, spokesman Tom Williams said. The retailer simply decided to use RFID to track inventory in its warehouses, not in its stores, he said.
“We didn’t cancel anything. We just didn’t follow through with this particular idea,” said Mr. Williams.
Other retailers, including Target and Home Depot, are testing RFID at distribution centers and in storerooms, according to David Hogan, a senior vice president for the National Retail Federation trade group.
“People are going to play in it, but I don’t think you’re going to see mass adoption of it until the end of the decade,” Mr. Hogan said.
Privacy advocates fear RFID will one day be pervasive. They say it is possible the chips could be embedded in clothing, carpeting and furniture, allowing retailers and other businesses to track everything a person purchases and brings into his home.
“If you have these devices in everything, all things have the potential to be tracked at all times,” Ms. Albrecht said.
Marc Rotenberg, executive director of the Electronic Privacy Information Center, a nonprofit research group, said retailers should be concerned about the implications of the chips.
“I think the privacy rights of customers is looming in the background as the largest issue. I think the retailers are a little bit concerned,” Mr. Rotenberg said.
Other retailers have tested RFID in limited trials. Two years ago, for example, the Gap Inc. tested radio-frequency tags on denim clothes at a store in Atlanta, according to published reports.
Industry executives say they are interested in using RFID technology to track products from the factory to the store, making inventory management much more efficient. The technology has not been perfected: Cellular telephones and other telecommunications equipment can interfere with RFID signals, and the cost of the microchips is prohibitive.
Mr. Williams said Wal-Mart plans to install the technology in its 103 distribution centers across the nation by January 2005.
RFID will allow the Wal-Mart warehouse workers to scan a single pallet of products rather than having to count the items individually.
A spokesman for Gillette said the company has not decided if it will team with another retailer to test RFID in stores. Gillette is testing the technology in Europe, and it wants to wait until it has completed those trials, Eric A. Kraus said.
“We’re trying to gather as much information as possible on the viability of this technology,” Mr. Kaus said.