Within two decades, the minuscule transmitters are expected to replace the familiar product bar codes, and retailers are already envisioning the conveniences the new technology, called "radio frequency identification," will bring — even as others are raising privacy concerns.
A grocery store clerk will know immediately when the milk on the shelf has expired, for example, and replace it before a customer can choose it. Stores could quickly pull from the shelves tainted and damaged products that are recalled or have expired, especially important in health care items.
"It would help you manage your inventory a lot better," says Todd Andrews, spokesman for the Rhode Island-based CVS pharmacy chain that will soon test the chips and antennae on its prescription medicines.
CVS's 4,000 stores fill millions of prescriptions each year but many customers forget to pick them up.
"If you could utilize RFID technology to tell you that a prescription is in the waiting bin, maybe the product could say: 'I've been here 10 days and I haven't been picked up yet.' Then, you could call the patient," Andrews says.
The technology builds upon the UPC (Uniform Product Code) symbol and bar codes that, when read by a scanner, enable manufacturers and retailers to keep up with their prices and inventories. A computer chip smaller than the head of an ant and a thin antenna attached to a bottle, box, can or package will alert retailers and suppliers when a product is taken off a store shelf or moved out of a warehouse. A radio signal is beamed to an electronic reader, which then delivers a message to a computer in the store or factory.
CVS, Procter & Gamble and The Gillette Co. are among the 100 retailers and manufacturers that have put up a total of $15 million for research on the new tags at the Auto-ID Center at the Massachusetts Institute of Technology. Other Auto-ID labs at the University of Cambridge in England, Adelaide University in Australia, Keio University in Japan and USG-ETH in Switzerland are also working on the technology.
Radio frequency identification technology is not new. The tiny chips and small antennae already are familiar to workers equipped with security cards that, when waived in front of a receiver, unlock the doors to their offices or relay information about the bearer to a guard.
The technology's potential for sending retailers and others information about consumers is already raising privacy concerns, however.
Marc Rotenberg, executive director of a watchdog organization, the Electronic Privacy Information Center, said retailers should be required to disable the tags before a consumer leaves a store.
"Simply stated, I don't think most people want their clothes spying on them," Rotenberg said. "It's also clear that there could be some very invasive uses of these techniques if merchants use the tracking technology to spy on their customers after purchase."
Researchers developing RFID tags for products so far have focused on the supply chain and limited the range at which a product could be detected. Once their use becomes universal the cost of the tags could be as little as a nickel each, they say.
Sanjay Sarma, the lead researcher at the Auto-ID Center in Massachusetts, says that by adding more functions to the chip, installing a battery and attaching a longer antenna, a receiver far away could read all the information on a chip, including its exact location.
Homes equipped with receiver-readers could alert consumers when they are running low on orange juice or their prescription for heart medicine is about to expire. Hooked up to a national network like the Internet, the at-home devices could also provide details to marketers about a family's eating and hygienic habits.
Sarma acknowledges that gigantic privacy concerns the technology raises, saying one way to address them would be letting consumers disable the chips once they leave a checkout counter.
"Any technology can be abused and we've got to be prepared, be watchful for the abuse," Sarma said.
Ron Margulis, a spokesman for the National Grocers Association, said the privacy concerns are far outweighed by the benefits of RFID. Retailers, he said, could respond much more quickly to product recalls and prevent people from becoming ill from tainted products.
"You do give up a bit of privacy but the benefit could be that you live," said Margulis.