Using the Internet of Things to Track Shoppers

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No longer content to use passive methods that track the number of people who enter their stores, brick-and-mortar retailers are now using software that allows them to watch customers as they shop, and more importantly, gather data about their behavior. Under the guise of making shopping more enjoyable, mobile tracking is helping stores understand a shopper’s behavior as he walks around a store. What aisles are the heaviest trafficked, what displays attract the most attention, what products were actually picked up and looked at more closely and was the product eventually bought? All these behaviors are very important to a retailer’s marketing and product offerings.

For the consumer this is a dual-edged sword.  In return for capturing data, merchants offer loyalty programs, discounts, and other benefits but this is generally without the shopper’s awareness that this is happening. People do like the idea of having product offerings tailored just to them, but they do not like to think that retailers have so much personal information and generally are not conscious of the fact that even store loyalty information is sold to other retailers.

Online retailers have had an edge in marketing because they have been able to gather information on what customers order but more importantly, they have been able to track what items are abandoned by a customer before the checkout stage. Until recently, brick and mortar stores did not have this advantage and although using promotions such as store loyalty cards help track and monitor individual customer purchasing behavior, this is not effective in predicting future behavior.

So how does the tracking technology work? Using phone data gathered from Wi-Fi hotspots which includes Bluetooth, GPS and smartphone app tracking, a detailed map of customer behavior going into, and moving around the store can be created. All this can then be paired with sales and credit card data. Even if a customer is not actually using WiFi functions, his smartphone can be detected. Most shoppers leave Wi-Fi active on their phones, meaning that wherever they go their phones are pinging off Wi-Fi hotspots, effectively leaving a digital footprint. Video cameras then give the store detail on the gender and age of customers, and they can even gather information about the reactions of shoppers to products they stop to examine. There is no limit on what stores can track except they cannot collect the contents of phone communications because of wiretapping laws.

In my book, “The Audacity to Spy”, I write about why retailers love these personalized advertisements. In a Harris survey, 81% of the recipients of personalized emails reported that they were more likely to increase their purchases, and advertisers have found that offering an instant coupon to purchase a product via a smartphone can alter a person’s shopping behavior while they are in a store. In addition, some sports venues, such as the NFL, are using individualized mobile messages, based on a person’s exact location, to increase their revenue by giving fans directions to ticket lines, stadium concessions, and nearby after-game food and drink locations.

Personalized digital marketing will only increase now that retailers can use the Internet of Everything (IoT) to combine your tablet, smartphone, game console, smart TV, social media, search engines, fitness watch and other devices with their point-of-sale information to gain a complete picture of you–their customer. While there seems to be little we can do about personalized ads, we should recognize why these ads are proliferating. As one marketing company puts it, “(we) digitally engage with shoppers – at home and on-the-go – to drive in-store traffic and sales”. Retailers have claimed that this type of analytics doesn’t interfere with consumers and isn’t noticeable–and while this may be true, do we really want to be manipulated in this way?

In his book, “Confronting the End of Privacy”, Andreas Weigend contends that in a digital environment we emit data as unthinkingly as we breathe, and that anonymity is an illusion. However, being aware of the tactics used in digital marketing may help us resist alluring messages and think twice before succumbing to this new age of strategic personalization.

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