Several consumer products to get 'tagged'

USA Today 01/28/03: Michelle Kessler

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SAN FRANCISCO By the end of the year, a host of consumer products will, for the first time, be sold with tiny computer chips known as RFID tags in them.

The chips contain small bits of data, such as a product's serial number, which can be read by a scanner. The scanner sends the data to a database so stores and manufacturers can quickly track what is sold.

The radio frequency identification tags could dramatically improve inventory processes, retail analysts say, thus reduce costs and maybe consumer prices. "Everybody's going to profit from these tags," says analyst Michael Liard of researcher Venture Development.

But the technology, one of the most widely anticipated in years, also raises privacy concerns. The fear: Thieves will buy or make chip scanners and crack security controls. That means someone might be able to scan shoppers' bags and know what they bought. Companies are testing solutions, such as turning off tags once they leave stores. Testing tags:

- Gillette. In the next several weeks, it plans to attach chips to packages of razors sold in a Brockton, Mass., Wal-Mart and several British grocery stores. Chip scanners on the shelves will track supplies. When low, the scanners will alert store managers.

- Procter & Gamble. It recently tested the chips on bottles of Pantene shampoo and Bounty towels to help track warehouse inventory and reduce lost merchandise. Next, it will tag some unspecified products in a Broken Arrow, Okla., Wal-Mart.

- Prada. It has tagged clothing in a New York store since December 2001. As customers shop, scanner-wielding salespeople can quickly tell what other colors and sizes a garment comes in, and if there are similar styles. Prada removes the tags before items leave the store.

Next month, the Massachusetts Institute of Technology's Auto-ID research center, which designs the chip technology, is expected to announce a widescale RFID project, involving big partners such as Johnson & Johnson, Coca-Cola, Pepsi, Home Depot and Target. The center has not yet specified which products will be tested in which stores.

RFID technology has been around since World War II. It's used to track shipping containers. It's found in gas station "speed passes" key chains drivers wave in front of the pump to charge a fill-up to credit cards. It also powers some highway toll systems, allowing drivers to bypass booths and pass an RFID-reading sensor instead.

But until recently, the chips were too expensive to put on individual products. Gillette's order this month for 500 million chips was among the largest ever, allowing them to be mass-produced for about 15 cents each, says Mark Roberti, editor of the RFID Journal trade magazine.

Soon, they might be found in all kinds of products. Tiremakers Michelin (by mid-2004) and Goodyear (by 2005) plan to embed the chips in some new tires. They will tell where a tire was made.