Benetton's introduction of "smart tag" tracking technology will be the largest example of a trend now emerging in the retail industry, according to Phillips Semiconductors, a unit of the Dutch electronics giant that designed 15 million tags being delivered to Benetton this year.
Benetton's Sisley line of clothing will contain a Philips Electronics radio frequency ID tag that will replace ubiquitous bar codes, which have to be manually scanned.
An RFID tag communicates its location to Benetton's computerized supply chain network, allowing the retailer to learn the status of its inventory at a glance and make restocking decisions quickly -- even automatically, said Terry Phipps, Benetton's electronic data processing director.
While there is no indication Benetton intends to track its customers with the tags, privacy advocates are worried that the technology could lend itself to unauthorized customer monitoring.
Other businesses, including luxury clothing retailer Prada, have previously introduced RFID inventory tags. Procter & Gamble, Wal-Mart and British retailer Tesco are among companies pursuing smart tags for restocking, anti-theft and anti-counterfeit purposes.
Phillips says its smart tags will be imperceptible to the wearer. They store information on the style, size and color of the garment and its path through the manufacturing and stock chain, said Karsten Ottenberg, senior vice president of Philips Semiconductors, based in Hamburg, Germany.
Because the ID is embedded in the clothes -- it's an antenna-bearing chip smaller than a grain of rice that's attached to the clothes' labels -- any item returned to the store automatically re-enters the inventory.
Since the chips contain no power source they can only transmit their data when within 3 feet of a receiver -- either a handheld unit or a shelving monitor in a Benetton store or warehouse, Ottenberg said.
The ID tags have the capacity to store and release more information -- although Ottenberg cautioned that the chips will store no data about the customer, and will be essentially useless after the garments leave the store.
In a scenario reminiscent of the personalized advertising seen in the movie "Minority Report," an RFID tag could be programmed to store information about, say, the person who bought a garment. It could allow a retail chain to take note each time that garment was worn into a store, said Ted Zwibel of Psion Teklogix, a British maker of supply chain software involved in the Benetton system.
For instance, a sales clerk might be tipped that a person in a pair of RFID-tagged slacks is a frequent customer. The salesperson could give that customer priority, and make sales suggestions based on the company's idea of clothes that match the slacks, Zwibel said.
Such scenarios could lead to protests over "spy clothes" on privacy grounds, said Wayne Madsen of the Electronic Privacy Information Center.
"There really needs to be legislation if companies are doing this," Madsen said. "They say it's for internal use. But what would prevent them from sharing it with third parties, with the government or criminal investigators?"
The ultra-short range of the RFID transmissions would make it difficult to scan the clothes without the wearer's knowledge, Ottenberg said.
But the RFID tags could be programmed for other short-range tasks, like "talking" to a forthcoming Whirlpool washing machine to alert it to proper washing instructions, Zwibel said.
Philips has already sold a half-billion of the inexpensive chips, the largest portion of which are used in smart cards for public transportation systems, Ottenberg said.
Ottenberg said such tags could be used for "customer loyalty" rewards that could earn consumers such benefits as frequent flyer miles, free music downloads or discount coupons.
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