There's good coverage of the pros and cons of RFIDs in today's New York Times. The pros, as I've mentioned, are superior inventory control:

Early tests are encouraging. For three months in 2001, Gap tested radio frequency tags on denim clothes at a store in Atlanta. Sales jumped because the tags prevented the store from running out of popular items, and the tags made it quicker to find any items in stock.

Typically, 15 percent of shoppers leave clothing stores without getting what they want; during the test, fewer than 1 percent of Gap shoppers left empty-handed.

However, there are still many cons to be ironed out including a high unit cost (currently around $0.30 per chip), a lack of industry standards and consumer fears of loss of privacy. And of course there's the classic problem of getting retailers to make the leap and invest in new technology.

Still, the prize is so huge, it is inevitable that RFIDs will replace the bar code. The question is whether that will be in two years or five.

The technological limitations of bar codes makes the growing interest in R.F.I.D. easy to understand. Kevin Ashton, a P.& G. executive who directs the Auto-ID Center, estimates that on average 10 percent of stores are out of items the managers think are in stock — and as many as 40 percent do not realize they are out of a color or size.

The monetary impact of losing track of goods is huge. According to a survey by the University of Florida, shrinkage — the common retailing term for goods that disappear either through theft, misplacement, fraud or just bad record keeping — cost retailers a record $31.3 billion last year. Only a third was a result of shoplifting. Nearly half was employee theft, about 5 percent was vendor theft and 15 percent was paperwork errors.