We are currently analyzing 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, Benetton said in a statement last Friday.
"No microchips are present in the more than 100 million garments produced and sold throughout the world under Benetton's brand names, including the Sisley brand," the company added.
The about-face comes three weeks after Philips Semiconductor announced it provided partners with RFID chips for use in Benetton's supply-chain management system.
Philips had earlier said it will ship 15 million radio tags for Benetton’s Sisley line of clothing.
RFID has been mentioned by pundits as the future of inventory tracking. In Benetton's instance, 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.
With RFID tags, it becomes technically possible for marketers to obtain invaluable information on a host of consumer preferences, ranging from the clothes they like to the food they prefer.
In addition, there are worries that such a technology could be exploited for government surveillance or be misused by hackers and criminals.
Philips, on its part, has reassured consumers that the clothing can't be tracked beyond Benetton stores and warehouses, as its chips have an operating distance of only 1.5 meters.
While the assurance may hold true for now, some industry experts say it is possible for criminals to increase the tracking distance by building a more sensitive RFID signal receiver.
Such nagging privacy concerns have sparked off strong consumer furor over the initial Philips-Benetton announcement.
Soon after its RFID plans were announced, an American 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.
Richard Shim contributed to this report.
