"RFID is the way of the future.".

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In January 2005, Tesco revealed that it had bought 4,000 radio frequency identification (RFID) readers and 16,000 antennas, one of the most substantial investments in the technology seen in Europe so far.

The efficiencies and cost savings that RFID can bring to bear throughout supply chains have persuaded retailers such as Germany's Metro Group and US giant Wal-Mart to invest heavily in reading devices and force suppliers to use tags.

But while most RFID implementations have so far concentrated on tracking pallets, helping retailers monitor the progress of crates of items within the warehouse, Tesco is proposing to use RFID to monitor individual, high-value items, such as DVDs.

Tesco will soon expand an item-level RFID test, already on trial at two of its supermarkets, to about 10 stores, said Colin Cobain, Tesco's UK IT director, speaking at the National Retail Federation Convention in New York.

Cobain believes that RFID will inevitably be used to streamline supply chains but can only achieve real return on investment if it is applied at the individual item level. "The future has arrived. We will track high-value, high-shrink items through our supply chain," he said.

But while the use of RFID tags within warehouses has gained acceptance, the notion of tracking individual items has sparked heated debate about intrusions into consumer privacy.

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Elsa Lion, Ovum analyst, says people who understand the technology will not be worried about potential threats to their privacy.

Every time new labelling technology appears, consumers feel their privacy is being threatened, but using RFID for consumer data is 15 years away - all this will do is vastly improve the efficiency of the supply chain. In a way this is not such a revolution in itself, because the RFID range is not that great.

Instead of having to scan bar codes one-by-one manually, RFID allows retailers to scan multiple items within their range; they don't require a line of sight.

Evidently Tesco needs to make sure it educates its customers and employees properly. It needs to make employees understand that this should mean customers are less likely to complain about products not being on the shelves, rather than some automotive device that will mean they lose their jobs.

Katherine Albrecht, founder of Caspian (Consumers Against Supermarket Privacy Invasion and Numbering) has called for a worldwide boycott of Tesco until it stops item-level tagging.

RFID tagging is acceptable in the store-room: I don't care how the products get into the store and the retailer shouldn't care what I do with them in the privacy of my own home once they're bought.

But the shop floor is shared space - both the customer and the retailer occupy it, and it is dangerous that the retailer thinks it can and will impose its own rules there.

RFID has great uses if, say, pharmaceutical companies need to recall faulty batches, but that is still taking place in the store room, not in public. Item-level tagging sets a dangerous precedent because individuals are rarely aware they are being tracked. When loyalty cards were first introduced, for example, most shoppers weren't aware that everything they bought could be monitored.