Retailers Go High-Tech To Track Shoppers

Stores now track shoppers as they browse to gather information about their target market.
By @katierucke |
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    Is she watching you? (Photo/epSos.de via Flickr)

    Is she watching you? (Photo/epSos.de via Flickr)

    If you’re one of the millions of American shoppers venturing to the mall this holiday season, make sure to plaster a big smile on your face, as more than 1,000 different retailers — from tiny boutiques to retail giants such as Macy’s and Walmart — are tracking your every move with cameras hidden in some unusual places.

    Although store cameras have historically been used as a form of surveillance to detect and deter shoplifting, stores are now tracking shoppers as they browse through a store to gather information about their target market, specifically what products consumers like and don’t like.

    One high-tech company that offers such a technology is called Shopperception. Created by Alfonso Perez, and used by the retail giant Walmart, Shopperception uses motion-sensored cameras that are equipped with facial recognition software to track shoppers demographics, what they buy, and how long it takes them to decide to purchase a particular item.

    “We have evolved in the way in which we want our products tailored to our liking,” Perez said.  “The brands and retailers are using this information to learn about us, to learn about what we like.”

    A similar technology created by Prism Skylabs uses “heat maps” on top of security camera images to determine items shoppers found to be most desirable. Colors such as red or orange denote a customers potential interest in a product, and is determined by how long a customer has stood in front of a particular item or how many times they have handled the item.

    In the past two years, Perez says interest in his shopper surveillance software has doubled. High-tech marketing company systems say many brick-and-mortar retailers have turned to such practices to learn about shopper behaviors in the past few years in order to compete with online retailers.

    “Brick-and-mortar stores have been disadvantaged compared with online retailers, which get people’s digital crumbs,” said Guido Jouret, the head of Cisco’s emerging technologies group, which supplies tracking cameras to stores.

    Jules Polonetsky, executive director of the Future of Privacy Forum, a Washington, D.C.-based think tank, added that everyone is adopting customer-tracking technology, from malls to big-box retailers to small coffee shops.

    As information regarding shopper surveillance begins to surface, one question that has arisen is if use of the software is an invasion of shoppers privacy.

    For Perez and many retailers who use the software, the answer is no. They point out that the information gathered by the cameras is far less invasive than other everyday surveillance practices, such as those used by law enforcement.

    “We don’t store any information about anybody,” Perez said. “We process the information in real-time.”

    But Joel Reidenberg, a professor of technology at Princeton University, said that because retailers have tried to keep the technology use quiet, there may be a larger privacy concern than they are letting on.

    “If the retailer is unwilling to be transparent with what they’re doing, the way they’re collecting information, how they’re using that information, it says they know their customers will be upset by it,” he said. “We have to decide, do we draw the line?”

     

    What do shoppers think about the cameras?

    One woman, who wished to remain anonymous, called the technology “creepy.” Another shopper, Bella Milizia, said, “It’s an invasion of our humanity and who we are as people.”

    But not every shopper was concerned about the cameras, such as Janet Sternson, who said, “If you’re an honest person and you’re not up to anything in the store, I think it’s fine.”

     

    Drawing the invisible surveillance line

    Although shopper surveillance hidden in a mannequin’s eyes is not viewed as a privacy violation by some shopper-tracking systems, Steve Russell, founder and CEO of Prisms, said that retailers who track customers by pulling information from their cell phones have gone too far.

    He said that his heat-map tracking system should be viewed as an alternative to a privacy violation, since once the security camera footage is analyzed with a heat, all visual traces of the customers are expunged.

    “Before, a merchant could only look at the register to see what was selling,” Russell said. “Now, you can see what products shoppers are spending time with. If somebody is picking something up and playing with it but not buying it, that tells the retailer the item may be overpriced. In the past, merchandising decisions typically have been made based on a merchant’s gut feeling. Here’s a way to make them based on data.”

    But those retailers, such as Nordstrom, which have used WiFi or Bluetooth signals from shoppers smart phones to track consumers’ habits, often argue that the system “is one way we can learn about our customers’ foot traffic and find additional opportunities to improve the service we offer them.”

    Cell phone tracking technology works by a retailer logging each mobile devices unique identification number, which is known as a MAC address — a 12-character string of letters and numbers. Since each MAC address is unique, retailers can analyze a variety of information, including how many unique customers came into the store and the path each shopper took in the store, which retailers say will help them improve customer service.

    Nordstrom doesn’t currently use any software to gather information about its shoppers from their smart phones, but when the company ran a nine-month trial using the technology called Euclid, many shoppers complained about the tracking system on social media and to Nordstrom employees.

    Tara Darrow, a spokeswoman for the retailer, said that the company ended the trial in May partly because of the negative feedback they were getting from shoppers.

    According to Polonetsky, “Even though Nordstrom had put signs up saying there was a test being conducted,” some were very upset, which Robert Plant, a computer information systems professor at the University of Miami School of Business Administration, said was an appropriate response.

    “The idea that you’re being stalked in a store is, I think, a bit creepy,” he said.

    But as Polonetsky pointed out, depending on the customer, this technology could be viewed in a flattering manner — a signal the retailer is working to learn about the shopper in order to customize their shopping experience. But he cautioned retailers that many will view the technology and unsolicited personalized experience as a freaky science fiction movie come to life.

     

    Legislating privacy requirements

    This past fall, the Future of Privacy Forum worked with Sen. Charles Schumer, D-N.Y., and a group of companies that create tracking technology, to come up with a code-of-conduct agreement that would both protect shoppers from having their privacy invaded, while allowing retailers to collect data that could be used for marketing purposes.

    Schumer was particularly vocal when it came to retailers tracking a shoppers personal cell phone, since they are personal devices that retailers shouldn’t have access to without a consumers permission, especially since how the information is used, who it’s sold to, where it’s stored, or how it’s secured, is not known.

    “Cell phone tracking is intrusive and unsettling — it’s as if you are being followed around while shopping at the mall, with someone looking over your shoulder at every product you’re considering,” Schumer said.

    “If you’re shopping, you expect to be the one doing the reviewing, but stores are flipping that on its head, and treating the consumers as the products. If stores are going to track you footstep by footstep, you should be alerted in no uncertain terms, and be given the opportunity to decline.  Personal cell phones are just that — personal. They shouldn’t be used as some James Bond-like tracking device without the shopper’s knowledge.”

    Schumer urged the Federal Trade Commission to enact a policy in which retailers must clearly display a sign informing customers that tracking technology is used, and also explain how customers can opt-out of tracking altogether.


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