RFID Journal Editor Mark Roberti's Blog

Why Isn't Wal-Mart Killing the Tags?

July 27, 2010

A member of my staff told me it didn't makes sense for Wal-Mart Stores to tag clothing and not take advantage of the kill command that would permanently disable the EPC RIFID tag, or to utilize some of the privacy features built into the new chips from Impinjand NXP Semiconductors. But actually, it makes good business sense. Here's why: 

Wal-Mart is currently tracking men's jeans and basics, plus some cases of consumer packaged goods (see Wal-Mart Relaunches EPC RFID Effort, Starting With Men's Jeans and BasicsWal-Mart Takes a New Approach to RFIDand Privacy Nonsense Sweeps the Internet). I would guess that less than 1 percent of the items the retailer will sell this year will have an EPC RFID transponder on it. In order to kill those tags, Wal-Mart would need to install readers at every checkout counter. 

Many stores have 40 or more checkout counters. Let's examine the cost, using round numbers and some rough estimates. If you multiply 4,000 stores by 40 checkout stands, Wal-Mart would need roughly 160,000 readers to kill the tags. At $3,000 apiece, that would amount to $480,000,000. Clearly, it doesn't make sense to spend half a billion dollars to kill tags on such a small percentage of products. 

That doesn't mean Wal-Mart isn't concerned about privacy. Whatever you might think of the world's largest retailer, it clearly doesn't want to lose customers over privacy issues related to RFID. So it has asked its apparel suppliers to place an EPC RFID transponder in each hangtag, label or exterior packaging, which will then be discarded before the consumer dons the item. 

What's more, since it doesn't have readers at the point of sale, Wal-Mart cannot associate a specific item with a particular individual. Therefore, there is no danger that the retailer could, for instance, track me in the store just because I'm wearing jeans it sold me. 

Wal-Mart has not revealed to me its long-term plans, but I do believe it has thought a lot about the privacy implications of employing EPC RFID technology in its stores. Clearly, the retailer intends to tag more products over time, and there will come a point at which installing readers at the point of sale will make sense. After all, if every item were tagged, RFID could automate checkout and reduce long lines, which consumers would love. 

At that point, I believe Wal-Mart will likely take advantage of the new features in the Impinj and NXP chips. It won't kill the tag, but rather mask the Electronic Product Code (EPC) with zeros or a random number, and it will limit the read range. That will protect consumers, while enabling Wal-Mart to restore the EPC if the item is returned. By that time, consumers—and, one hopes, the media—will be more knowledgeable about RFID, and people will be comfortable with the fact that their privacy is being protected.

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Mark Roberti

Founder and Editor

RFID Journal

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Mark Roberti is the founder and editor of RFID Journal. His blog focuses on all aspects of radio frequency identification and related technologies.