In-Store Customer Tracking: Innovation or Invasion?

How retailers can best compete in a digital world is a vexing subject. Recent news items on stores like Home Depot and Nordstrom using customer tracking technology in their stores caught my attention. Depending on your point of view, this is either another useful ma

nifestation of big data or a big invasion of privacy!

The technology goes by various names—hyperlocal, in-store tracking and in-store positioning are common descriptors.  Geofencing is a related retail tool that performs slightly different locational functions by indicating when a person enters a specified area. In-store tracking allows stores or malls to monitor your movements while you are on the premises, producing Google Analytics-type metrics like which departments in a store people visit and how long they stay in each. A heatmap from one of the technology providers, YFind, shows a mall application—visitors and unique visitors to specific stores and “dwell time” for each visit.

Euclid is the technology used by Home Depot and Nordstrom, although Nordstrom describes its use as “a test” that provided useful data but has now ended. The chart shows how their technology works and most 

of it is straightforward. A shopper enters the store, her smartphone automatically pings looking for wifi, the system captures the phone’s MAC address to identify the shopper, then uses it to send repeated pings to the cloud as the shopper moves around the store. MAC address is the thing I had to look up; it’s the ID permanently burned into every device that can connect to the network.

The fact that all of this is done without active participation by the shopper, in fact without the shopper’s knowledge, is whatbothers privacy advocates. The systems suppliers insist they only collect and provide anonymous data to their customers. You be the judge.

Recently Ad Age interviewed Dennis Crowley, founder of Foursquare. The video contains interesting speculation on “reinventing retail” including the prediction that users could soon be automatically checked in when they enter a store. I wonder if users will be comfortable with that, but the video is worth watching. 

If you want to up the creepiness factor, consider the possibility of providing leads to retailers as consumers enter the store. According to Media Post, a start-up called Purple Cloud monitors consumer activity with regard to a  ”specific product on a Web site, which triggers an email to the retailer and a photo of the consumer taken from their social network profile.” The retailer can then send a tweet or email to the prospective customer, presumably as he enters the store. On the face of it, that is seriously creepy. However, the customer must download the Purple Cloud app to make this all work, so that may be a mitigating factor. Watch for more on this emerging technology.

For sure, we are going to see more changes in the in-store shopping experience! Whether they will result in genuine privacy problems remains to be seen.