In a strategic business move that will, among other things, force suppliers and competitors to follow or get out of the way, retail giant Wal-Mart Stores, Inc. will expand its use of radio frequency identification (RFID) tags by implementing it down to the product level on such items as jeans and underwear.

As early as 2005, Wal-Mart has partnered with suppliers to track inventory through the use of electronic product codes (EPC) — powered by RFID technology — at the pallet and case level.

At the time, the retailer sought to dispel speculation that products would be tagged individually using the radio technology.

“Wal-Mart is not focusing on item-level tagging,” the company said in a December 14, 2004 myth-buster press release. “Instead, Wal-Mart is asking suppliers to put EPCs on cases and pallets used to transport these items.”

This week’s announcement, first reported by the Wall Street Journal, appears to be an expansion of this inventory tracking tool.

“This ability to wave the wand and have a sense of all the products that are on the floor or in the back room in seconds is something that we feel can really transform our business,” said Raul Vazquez in the Wall Street Journal’s July 23 report. Vazquez is the executive in charge of Wal-Mart stores in the western U.S.

Wal-Mart has been on a fast track to bringing the benefits of RFID technology to consumers for several years.

At a 2007 industry conference, Wal-Mart Executive Vice President and CIO Rollin Ford said the RFID technology is providing value to customers.

“Our focus on using RFID to improve in-stocks for our customers means eliminating extra trips they may make to our store, or to others,” Ford said. “On a daily basis, more than 24 million people shop our stores. If 100,000 extra trips are avoided by having items in stock, we will save customers $22.8 million a year in gas savings and reduce greenhouse gases by 80,209 metric tons.”

Ford said during the same keynote speech that customers would soon enjoy greater advantages with RFID technology.

“In the near future, customers may be able to enjoy advantages such as automatic warranty activation on electronics, freshness assurance on foods thanks to cold chain monitoring and enhanced product safety as a result of faster, more accurate recalls and better freshness monitoring,” he said.

Similarly, the RFID Research Center at the Sam M. Walton College of Business at the University of Arkansas conducted a fifteen week study of five JC Penny stores. The white paper revealed that, overall, inventory accuracy dramatically improved when RFID technology was employed over standard manual inventory counting processes. (Editor’s note: the white paper, once available for download as Article Article #ITRI-WP151-0410, is currently unavailable.)

But the company’s thrust to realize so-called “next-generation” Wal-Marts has some privacy advocates alarmed.

“RFID would expand marketers’ ability to monitor individuals’ behavior to undreamt of extremes,” says Katherine Albrecht, founder of Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN) “With corporate sponsors like Wal-Mart, Target, the Food Marketing Institute, Home Depot, and British supermarket chain Tesco, as well as some of the world’s largest consumer goods manufacturers including Proctor and Gamble, Phillip Morris, and Coca Cola it may not be long before RFID-based surveillance tags begin appearing in every store-bought item in a consumer’s home.”

A 2004 workshop sponsored by the Federal Trade Commission (FTC), in which Wal-Mart participated, emphasized consumer’s concerns regarding RFID technology infringing on personal privacy.

In two consumer surveys, “nearly two-thirds of all consumers surveyed expressed concerns about potential privacy abuses,” the FTC noted in its workshop report. “Their primary concerns centered around RFID’s ability to facilitate the tracking of consumers’ shopping habits and the sharing of that information among businesses and with the government.”

For its part, Wal-Mart has previously stated that the RFID technology is considered “passive”, meaning they have no internal power source and must be passed by a special reader that “wakes” the tag up so that it can transmit its product bar code information and unique identifier.

During a Big 3 News live broadcast on July 23, viewers expressed mixed reaction to the news from Wal-Mart.

“I think that’s just another move for Big Brother,” Big 3 News Contributor Ethan commented on the broadcast. “They will know where we are at at all times, if they would track them.”

Ethan said if the RFID tags are going to be permanent, he would oppose it for privacy concerns. If the tags are removable, he would be more accepting of the business practice.

Another caller, identified as Dr. Dissent, said he felt it was inevitable.

“When you look at the global trade that goes on, and all the various components and things that are being manufactured all over the place and the shipping complications, it would be very nice for somebody who makes a pair of pants, to say this is a pair of pants that belongs to Wal-Mart at store ‘whatever’.”

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