Wal-Mart and RFID – A Follow-Up

On May 7, 2004 we ran a story titled “RFID & Privacy? Fugedaboudit!” In it, I speculated that it would be a couple of years before it became a real problem. While that may still be true, the shopping public needs to know that “the future is now” at Wal-Mart.

Last week, Wal-Mart started receiving RFID marked containers from eight manufacturers at its Dallas Fort Worth shipping center. These first shipments are a test of Wal-Mart’s new supply chain technology. Provided that the test goes well, the company plans a wider roll out in 2005 that will initially include its top 100 suppliers as well as a variety of smaller suppliers that have voluntarily agreed to implement the RFID protocol.

Initially, Wal-Mart will be using RFID solely for purposes of inventory management. RFID has the potential to significantly reduce supply chain costs by letting retailers know exactly what they have on hand at the push of a button. This means that they don’t have to carry additional inventory of items. It also means that they should never run out of items that are not in short supply from manufacturers.

With a little networking, retailers furnish this information in real time to manufacturers, having a similar impact on their supply chain costs.

Needless to say, both manufacturers and retailers are extremely excited about RFID.

But, as with any tool, RFID can be used for good or bad purposes. On the good side, cutting costs, always having the right merchandise on hand, reducing theft. On the bad side, merchants and manufacturers will eventually be able to setup RFID tracking that that will allow them to build highly personalized profiles on every consumer. If you think that this sounds somewhat Orwellian, it does. There is however, no reason to think that it will not happen.

In Wal-Mart’s case, the company has publicly stated that in its initial introduction, items will only be marked with RFID at the shipping case level. This means that you don’t have to worry about purchasing a shirt that has an RFID tag sewn into it, that allows Wal-Mart to track your every movement.

Unfortunately, shipping cases for bigger ticket items, such as home electronics, are the same packages that customers take home when they make a purchase such as a TV. The box it comes in is the shipping container and it will have a RFID chip on it. Can it be too long before Wal-Mart starts matching the credit card you used to purchase the television with every other purchase you have ever made in one of their stores?

More unfortunate still, is the long term privacy stance that Wal-Mart has apparently taken. They really want you to give up your right to privacy whenever you shop with them.

In an article published in NACS Online, Linda Dillman, Wal-Mart’s Chief Information Officer tried to reassure consumers that at the introduction of RFID, there would be no consumer tracking. She then went on to say:

"However, down the road, there are so many possibilities to improve the shopping experience that we hope customers will actually share our enthusiasm about EPCs.” (Note: EPCs is Wal-Marts RFID system)

The bottom line here is that if you want to protect your privacy, you may want to consider using cash when shopping at Wal-Mart.