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Wal-Mart, the world’s biggest retailer, said yesterday its test of Radio Frequency Identification (RFID) technology has gone without glitches.

The test, which is using the tags in a small group of Dallas-area stores and distribution centers, began late last month. The goal of the test, which uses technology to read identification tags even without a clear line of sight, is to reduce theft, improve in-stock positions, and help retailers facilitate product recalls. Cases and pallets of 21 different products from eight suppliers are being used in the test.

By January, as many as 100 of Wal-Mart’s top suppliers are expected to be involved in the test; all of Wal-Mart’s domestic suppliers are expected to be using RFID technology by 2006.
KC's View:
There are those who say that the only way this technology will become widely used is when the cost of the RFID tags gets as low as a nickel, with some expecting that this kind of price drop will occur fairly soon. But we’ve spoken with people who believe that this is a pipe dream, and that we are a long way from that kind of price point on RFID tags.

For a long time, according to people we know and respect, RFID is going to be largely Wal-Mart territory. It’s going to be up to the competition to find ways to compensate.