All you need to know about instore consumer tracking

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The Dutch retail world was in turmoil in the first month of this year. Electronics chains Dixons, Mycom and iCentre were found to be tracking consumers via Wifi, bluetooth and infrared cameras in 160 stores. The privacy debate that seems to grow along with technological development was spurred on once more.

The problem in this case was that MAC addresses were tracked and documented so individuals could be recognized during future visits. This is not allowed in the Netherlands without informing the consumer, according to CBP (College bescherming persoonsgegevens, loosely translated as institute for the protection of personal information).

Coinciding with the release of Apple’s iBeacon, developments such as these indicate that something is brewing in the retail world. New technologies offer great possibilities, but have their ethical restrictions. Let’s have a look at what is going on!

Technology

In a true hype-like fashion the market is flooding with consumer tracking solutions. There is a bunch of different approaches available. Perhaps the best known example is Apple’s iBeacon which uses a specific bluetooth protocol to communicate between iOS devices, allowing location tracking. Apple introduced iBeacon as a partly open platform that will be developed upon in the years to come. So expect new possibilities here.

A more old-school approach is heat mapping with infrared cameras. Average crowd densities are calculated based upon infrared video recordings of the shop. This will provide the retailer with an image of the crowd density in different zones of the shop. This approach is largely surpassed by mobile device tracking due to a couple of shortcomings. Infrared cameras do not allow any analysis of individual consumer behavior for instance.

Example image of a heat map of crowd density in a shop

Example image of a heat map of crowd density in a shop

 

Other options include tracking via social wifi routers and advanced video analysis of security-style cameras.

Benefits for the retailer

Consumer tracking is a brilliant source of information for any retailer. It offers insight into the actual behavior of (potential) clients. It allows for analysis and evaluation of store design. When combined with social data it can even offer profiles of consumers and how their behavior differs. For instance, it could tell a retailer: „Male shoppers prefer path 1, whereas female shoppers prefer path 2”. In fact, the latest technologies go even deeper, telling retailers how shopping behavior differs per age group, gender, educational background and even musical preference. Basically, anything you have put up on Facebook or Linkedin can be used to analyze you in instore analysis, provided that you have actively allowed the shop to access that data. Such deep analysis is impossible without consumer accordance.

Besides analysis, targeted communication is of great value to retailers. When using mobile technologies for tracking consumers, it is possible to interact with them via their mobile devices, based on location and/or behavior. For instance, if you have been dwelling in front of a new product for a while, a tracking system could send you a targeted offer to give you that little push that you need to go for the purchase, boosting conversion.

Example of local promotion targeted to a specific individual

Example of local promotion targeted to a specific individual

Again, with your approval, this targeted interaction could even be based on your own personal preferences, age, gender, education level or anything else you publish on social media.

The connection with social media obviously also allows for sharing with friends, offering broad promotion.

Benefits for the customer

The development of tracking solutions was initiated with the retailer in mind. It is mainly intended as a tool to improve shop design, targeting and interaction with consumers. This might be one of the reasons why the implementation is often met with cynicism by consumers. This should be a major focus of developers over the coming years; how to truly add value for the consumer with these systems.

There are some benefits, however. The overall experience, for instance, is enriched and personalized. You can be advised and assisted via your mobile phone. Also, promotions are much less like a shot of hail and much better suited to your personal preferences of purchasing behavior.

Ethical implications

With NSA-like scandals constantly surfacing, privacy finally seems to be on the agenda of the general public. And rightfully so. The market is full of cowboys who care more about valuable data, than your privacy. The whole deal is whether your consent is needed. There is little wrong with asking someone if he or she can be followed.

The first initiatives to prevent tracking are sprouting as well. There are online opt-out databases where you can register to prevent being tracked. A bunch of major tracking suppliers have agreed to honor these databases.

For now though, it seems there is no way to be absolutely sure you are not being tracked. The upheaval this triggers is understandable.

There is one obvious nuance in the story, which is the fact that your device is tracked, rather than your identity. Unless you allow a retailer to access your social media, only the MAC address of your phone is traceable. This does mean that connections could be made. A supermarket in New York could potentially see you have been to a shop in Boston as well. They cannot see that it was you specifically though.

Also, many suppliers offer batch data to ensure privacy. Reports would, for instance, include „the average education level of group x” instead of „Mr. Johnson has a Master’s degree in business, according to his LinkedIn page”. Still, it is unclear whether the person-specific data is available to the suppliers themselves. So perhaps the biggest ethical issue is the opaque nature of the current market.

All in all the development of instore tracking is exciting in many ways. Not just technically and commercially, but also ethically. As is often the case, the question is whether legislation can keep up with technology. And whether consumers will get used to being tracked, or grow more and more annoyed by the invasion of their privacy.

What is your stance on the development of instore tracking systems?

Thomas van Straaten
Instore media consultant

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