THE TALK OF THE AISLES

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Radio frequency identification chips are generating their own buzz as the packaging industry approaches this week's Food Marketing Institute convention. RFID chips, which are being considered for product packaging, can store and transmit a wealth of data, such as who bought the product, where and for how much-even long after products leave the store.

RFID CHIPS won't be practical for most consumer products until they cost a penny apiece or less. But the technology already is provoking howls of protest from privacy advocates.

So far, technical barriers are falling faster than political ones. Gillette Co. already has ordered a big batch of RFID chips for as little as 5¢ apiece, the lowest-cost order to date. The marketer of Mach3 razors and Duracell batteries began testing RFID on individual products at a Tesco store in the U.K. late last year.

The test covers only warehouse and store supply-chain issues, aiming to reduce product out-of-stocks and theft, a Gillette spokesman says. "I think all parties involved are very conscious about issues surrounding privacy," he notes.

Procter & Gamble Co. and Unilever, involved in their own tests using RFID chips, also are currently testing only supply-chain applications, not marketing programs, spokesmen say.

Banc of America Securities analyst Bill Steele believes public paranoia about RFID data will make marketers cautious. But the insight the data can provide into how people buy and use products may prove irresistible, he says.

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