INNOVATION

How Are Stores Tracking the Way That We Shop?

More and more are using sensors to follow the cell phone signals of customers to understand how they behave

December 13, 2013

Stores are using sensors to make sense of the madness. Photo courtesy of Flickr user Sanctu

I can say with great certainty where I will not be spending time this weekend--a shopping mall.

But I realize that many of you, either out of necessity or for reasons I personally cannot fathom, will be devoting a big chunk of your time to visiting one, or more. And if that's the case, you should know that there's a chance that a store or two will be tracking your every move.

It's not that they'll be that interested in you, particularly; rather, it's your movements they want to follow. Where do you spend the most time? How much of the store do you actually cover? How long do you wait in line?

Tracking shoppers is a big trend in brick-and-mortar retail these days, one designed to mimic what e-commerce websites have been doing for years--namely, gathering loads of data about shopping behavior and using it to quickly adapt to what customers are doing and, ideally, anticipate their needs so they'll keep coming back.

Follow that phone

So how are they tracking people? A few ways, actually. One involves sensors that zero in on the Wi-Fi signals from shoppers' cell phones. Another uses images from security cameras to create "heat maps" showing which items are attracting the most attention and, conversely, where the dead spots are.

Stores using Wi-Fi sensors point out that they're not gathering information that would allow them to identify people. But since cellphones send out unique ID numbers when they search for Wi-Fi signals, retailers can recognize the numbers of repeat shoppers and then see how long they go between visits and if they follow certain patterns when they do come back.

Even though the data is anonymous, the fact that their movements are being tracked still feels creepy to a lot of people. Nordstrom discovered that last spring after it posted signs in its stores explaining that, for research purposes, it was tracking the cell phone signals of shoppers. Some customers complained directly to store managers; other vented their wrath on social media sites. Nordstrom ended the research in May.

But as many as 1,000 other stores around the U.S. are now tracking shoppers, according to the Future of Privacy Forum. In October, the Washington think tank got companies that analyze store sensor data to agree to post signs alerting shoppers when they're being tracked. The group also is now pushing for the creation of a national registry where cell phone owners can register their device's ID number, known as a MAC address, and request that that number not be followed.

Such a deal

The truth is, though, some shoppers don't mind being tracked; in fact, they think it's a great way to find out about bargains. More and more people are downloading store mobile apps that help them find what they're looking for, but also can deliver on-phone coupons based on where a person is in the store.

That trend just got a big boost with the launch of a new Apple technology called iBeacon. These are sensors that communicate directly with iPhones when a shopper passes by, letting them know about deals or discounts.

Apple rolled out iBeacon in its own stores last week. Last month, Macy's, working with a startup called Shopkick, began testing it in particular store locations in New York City and San Francisco. As soon as shoppers who have downloaded the Shopkick app walk into one of those Macy's, they receive notifications on their iPhones about specials, and are reminded of products in which they have shown an interest during past visits.

The retail strategy seems to be catching on. Last summer, Timberland began testing a similar technology in its stores. More than 35 percent of the people who received coupons on their phones used them. With an email coupon campaign--one that's considered successful--only about 15 percent cash them in.

Shop class

Here's more recent research on shopping:

Plastic fantastic: Researchers at the University of Kansas say they found that shoppers who use cash view their purchases very differently than those who use credit cards. People who use the former tend to keep things real--they focus on the cost of products and any related fees, such as warranties. But, according to the scientists, customers who pull out the plastic are more likely to zone in on a product's special qualities, such as the great picture on a new TV or the softness of a new sweater. Said lead researcher Promothesh Chatterjee: "When it comes to product evaluation, beauty lies in the eyes of the cardholder."

Brain drain: British scientists are trying to get a fix on what goes on in our brain when we shop--specifically how it deals with bargains. They're having study participants do a simulated shop while in a MRI scanner, with an emphasis on looking for bargains and buy-one, get-one-free deals. The study is ongoing, but preliminary findings suggest that consumers only respond rationally and mathematically for the first 23 minutes of their shop, after which they begin to think with the emotional part of their brain and tend to get hazy on the value for money.

Plus, your phone will never tell you something makes you look fat: According to new research from Marketing Land and SurveyMonkey, Americans are now heavily using smartphones to shop, but it's not so much to actually buy stuff. Two-thirds of those surveyed say they frequently use their phones to do in-store research, such as comparing prices on websites of competitors, reading product reviews or getting advice from friends. But only 14 percent said that they regularly make purchases on their phones, and the highest percentage of those who don't say it's because they feel that checking out by phone is still too hard.

Santa will see you now: And now, you can get a "speed pass" to see Santa Claus. That's right, no more waiting in line. Some stores have begun offering a service where you can leave your cell phone number with one of Santa's helpers and he or she will call you 20 minutes before Mr. Claus is ready to spend a little quality time with your kids.

Video bonus: Check out this rundown of some new shopping apps, compliments of the New York Times.

Video bonus bonus: And in the spirit of the season, here's a clip of the Simpson family holiday photos through the years.