Wal-Mart to use sophisticated ID tags to track products

Wal-Mart Stores Inc. plans to roll out sophisticated electronic ID tags to track individual pairs of jeans and underwear, the first step in a system that advocates say better controls inventory but some critics say raises privacy concerns. Wal-Mart Stores Inc. is also putting electronic identification tags on men's clothing like jeans starting Aug. 1 as the world's largest retailer tries to gain more control of its inventory.

Starting next month, the retailer will place removable "smart tags" on individual garments that can be read by a hand-held scanner. Wal-Mart workers will be able to quickly learn, for instance, which size of Wrangler jeans is missing, with the aim of ensuring shelves are optimally stocked and inventory tightly watched. If successful, the radio-frequency ID tags will be rolled out on other products at Wal-Mart's more than 3,750 U.S. stores.

Lorenzo Lopez, a Wal-Mart spokesman said that "There are so many significant benefits in knowing how to better manage inventory and better serve customers. This will enhance the shopping experience and help us grow our business."

Wal-Mart's goal is to eventually expand the tags to other types of merchandise but company officials say it's too early to give estimates on how long that will take.

Raul Vazquez, the executive in charge of Wal-Mart stores in the western U.S. added that "This ability to wave the wand and have a sense of all the products that are on the floor or in the back room in seconds is something that we feel can really transform our business."

Wal-Mart won't disclose what it's spending on the effort, but it confirms that it is subsidizing some of the costs for suppliers.