Has Benetton taken a 'chips in clothes' U-turn?

Benetton has distanced itself from reports that it was to use radio tags in its clothes products, in a move which privacy groups are hailing as a victory but one which Dutch electronics giant Philips, who was set to provide the technology, will count as a major loss.

Philips had been expecting to ship 15 million radio tags for Benetton's Sisley line of clothing.

However, Benetton has been quick to quash suggestions that this is a U-turn, saying it had never formalised plans for a widespread implementation of the technology.

A spokesman for Benetton said the company has to date purchased only 200 radio frequency identity (RFID) chips and is still studying whether or not it will use the controversial technology to track its products.

The spokesman said there was a misunderstanding about Benetton's use of RFIDs and while the company didn't think it was a major issue, concern in the financial markets regarding the cost of technology and its benefits caused the company to clarify its position.

"We are not using any RFIDs in any of our garments today," he said.

This supports a statement from Benetton last Friday, which said: "We are currently analysing RFID (Radio Frequency Identification) technology to evaluate its technical characteristics and no feasibility studies have yet to be undertaken with a view to the possible introduction of this technology."

RFID has been mentioned by pundits as the future of inventory tracking. In Benetton's case, a box containing clothes with embedded RFID tags can be scanned and data uploaded in one pass, instead of having each item unpacked for bar code scanning.

Despite the obvious merits, the ability to track a product's movement also raises a disquieting concern about privacy.

Such nagging privacy concerns have sparked off strong consumer furore over the initial Philips-Benetton announcement.

US consumer privacy group - CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering) - hit out at the international clothing chain and called for a worldwide boycott. The group urged consumers to avoid Benetton products until the company publicly renounced its involvement with RFID.

While it is unclear if Benetton is bowing down to such pressures, the company did say it will consider the "potential implications relating to individual privacy" before firming up its RFID plans.