Technology: Who's Tracking You?

In the 2002 sci-fi thriller “Minority Report,” the hero played by Tom Cruise lived at a time when electronic billboards sensed who was passing by and churned out special ads reflecting that person’s personal tastes in consumer goods. We’ve grown accustomed to allowing e-businesses to access our data via cookies and other online tools to determine our buying and spending habits. Now bricks and mortar establishments are looking to even the playing field – and wireless technology is giving them the means to do it. We’re not quite in “Minority Report” territory, but we are getting close.

Most of us carry smart phones that transmit Wi-Fi signals, and we’ve probably watched enough TV to know that detectives can track down their suspects if they’re carrying cell phones. What you might not know is that some retailers are tracking customers’ movements inside their stores, monitoring specific activities including which aisles they visit, using technology known in the trade as retail analytics. Retailers can obtain this tracking technology from several companies – RetailNext, Nomi and Euclid Analytics are some of the best known. Some businesses also use retail analytics to monitor how many people pass by and how many actually enter their store.

In several publicized cases, retail customers have been vehemently opposed to this type of surveillance on the grounds it violates customer privacy. Customers of upscale retailer Nordstrom reacted badly when notices appeared advising store customers that they were being monitored in this way. Their reaction prompted the retailer to abandon its experiments with retail analytics. Traditional bricks and mortar stores that use retail analytics argue that tracking technology does nothing that e-commerce sites don’t do. This might be true, but it does little to appease critics.

From a retailers’ point of view, the data can be used in many ways to create marketing advantages. By studying shoppers’ routes through the store and the time they spend in different departments, retailers can study and revise the layout of their stores. The data can also provide gender-specific information and help build profiles of repeat customers.

For many consumers, store-tracking technology that hitches a ride on their smartphones’ Wi-Fi networks without permission is worrying and intrusive. However, when provided with tangible incentives and offered the choice to participate or not, consumers frequently are willing to play ball. Shoppers have proved happy to give personal information and access to their phones’ Wi-Fi in return for coupons or cash incentives. Free apps are available to shoppers who use them to download special deals available at nearby stores. In return, the retailers get demographic data and have permission to track shoppers through their smart phones’ Wi-Fi.

How well customers accept retail analytics technology will determine where the industry goes from here. If you don’t want stores to track you, the best deterrent is to turn off your Wi-Fi signal before you hit the mall.

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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