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KAI RYSSDAL: You walk into a store and the clerk greets you by name. Nice, right? But what if that clerk knew your name because a tiny device transmitted it without
your knowledge? Yeah, not so nice, huh? They're called radio frequency identification tags, or RFIDs -- microchips so small they can be sewn into a clothing label. Some say that this year alone, companies bought over 1.3 billion of those little tags. Eli Portnoy is chief brand strategist for the Portnoy Group. Eli, why is this becoming so common?
ELI PORTNOY: Companies are finding that with the cost of doing business today that they need to keep a handle on their merchandise that turns their relationship with their retailers. I mean, anything that can provide information about what consumers are using and buying quickly, and restock shelves and turn things more quickly, keeps overall costs down. So it has a tremendous inventory benefit. And in a world today where companies are striving to increase profit, and they don't have a lot of new ideas, anything they can do to reduce their cost of doing business is very much welcome.
KAI RYSSDAL: So there is that very practical and sort of operational aspect, but isn't it more than that? Isn't it that they can now sort of know me a little bit better? Know the consumer?
ELI PORTNOY: Oh, absolutely. This is about tracking every consumer's activities -- when they use a product, where they use it, how often they use it. This radio frequency device is now washable and can be imbedded in clothing. So if you buy a piece of clothing from, say The Gap, they might be able to actually track when you wear it, where you wear it. For a business, they see value. To the consumer, they see tremendous fear about, 'My life is now in the hands of third parties.'
KAI RYSSDAL: Obviously all this information is tremendously valuable to companies. Is it so valuable that they would keep it up, even in the face of consumer opposition?
ELI PORTNOY: If you, as a company, can track your best customers, and even your new customers, and understand their behaviors, you can more effectively and cost-efficiently reach them with more of what they want. This product, this frequency device, can lead to advanced information being projected to a source, to recognize a customer coming in and making that experience better. So there are some interesting opportunities here. The question is how it gets managed so that the consumer doesn't feel like, 'That person, this thing, this unknown, is following my every whereabouts, and that I don't have any more
You know, recently in this country, because of wiretapping in a very broad use, and other infringements on people's privacy, consumers and general public advocates are more concerned about every day we lose the freedoms we had and the privacy we had to just live our lives in normal ways and not be concerned that some other person and entity knows everything about us. If not done correctly in the very near future, this will backfire and there'll be huge boycotts by consumers, there'll be tremendous anger at companies, and it could be very detrimental vs. something very positive.
KAI RYSSDAL: Eli Portnoy is the chief brand strategist at the Portnoy Group. Mr. Portnoy, thanks a lot for your time.
ELI PORTNOY: My pleasure.