NEW YORK (TheStreet) -- Last week, when the Wall Street Journal announced that Wal-Mart(WMT) will begin testing electronic identification tags in some of its apparel merchandise starting this summer, it was viewed by some as a boon to Wal-Mart's efficiency and inventory efforts -- and, by others, as a privacy nightmare.
More on WMT Wal-Mart Tags Don't Invade Shopper Privacy: PollPimco Has New Way of Looking at World10 Dow Stocks Investors Should Avoid Market Activity Wal-Mart Stores Incorporated| WMT UPThe discount behemoth will reportedly begin testing smart tags on men's clothing next month -- including jeans, underwear and socks -- in an attempt to gain more control over its inventory. The removable tags can be read from a distance with scanners to let workers know what sizes are running low on the shelves and tell what items are in stock. They could also ostensibly help combat employee theft. Wal-Mart plans on rolling out the tags to other merchandise categories, but did not provide a timeframe for when this would take place.
The tags works by reflecting a radio signal to identify products. This technology is not new, dating back to the 1940s, but is generally used in warehouses, not on individual products.
Radio-frequency identification technology has long been a concern among privacy advocates. One fear is that Wal-Mart would be able to tack movements of customers, who, in some border states like Michigan and Washington, are carrying driver's licenses that contain RFID tags to make it easier for them to cross borders. While these tags can be removed, they can never be turned off, and can even be traced in the garbage.
As Wal-Mart is the biggest retailer in the world, it is also likely that other companies would follow its lead if the program proves to be a success.
Wal-Mart has attempted to alleviate these fears, promising that it will be taking a "thoughtful and methodical approach," and that the tags do not collect customers' information, and are strictly for inventory management purposes.