Winnipeg Free Press - PRINT EDITION

Retailers are tracking customers' every move

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SHOPPING online is a revealing act. Websites know what catches visitors' fancy, how long they linger and where to find them when they leave.

Traditional shopkeepers are blind by comparison. Who enters their stores and how they behave are mysteries, ones only partly solved when someone buys something. A click from a finger means more than one from a stiletto heel.

Brick-and-mortar retailers would like to change that. Stacey Shulman, technology chief of the clothing chain American Apparel, craves "the same type of analytics in-store as I can get online."

In many cases the equipment is already there: Security cameras watch out for thieves and Wi-Fi networks pick up mobile-telephone signals. A "furious amount" of testing is going on to see whether such technology can help retailers understand customers better and thus boost profits, says Anthony Mullen of Forrester Research.

Simply knowing how many shoppers cross the threshold, and when, can be useful. American Apparel's store managers thought they were busiest when sales peaked. They were typically off by two hours. Now the retailer gathers traffic data from cameras mounted above the doors and feeds that into its staff-scheduling software. When crowds come, the shops now have enough salespeople to serve them. As a result, sales are up "across the board."

Traffic-counting already is fairly common practice. Shoppertrak has been providing that service to stores for 20 years. A newer breed of service providers, such as Retailnext, American Apparel's partner, and Tyco, whose roots are in security, encourages retail chains to harness in-store hardware for more exotic purposes. Crime-fighting cameras guess shoppers' sex and age, and draw "heat maps" showing how they move around a store.

Gordmans, a Midwestern department-store chain, discovered via video that goods at a particular display sold especially well. It changed the wares from home furnishings to higher-margin fashion items. Mannequins made by Almax, an Italian company, look back at customers with camera eyes, noting sex, age and ethnicity. One noticed a contingent of Asian shoppers arriving at a shop at the same time every day, prompting the manager to post Asian salespeople to receive them.

Tracking mobile telephones yields different nuggets: what share of passers-by enter a store, how many leave immediately -- the "bounce rate" -- and how many are repeat customers. At least half a dozen retailers are experimenting with tracking employees' mobile telephones to find out, for example, how long it takes to retrieve a pair of shoes from the stockroom.

Retailers need every advantage they can muster to cope with price-chopping websites and skittish rich-world consumers. They risk giving shoppers the creeps, however. Pam Dixon of the San Diego-based World Privacy Forum thinks that using cameras for non-security ends "violates some very fundamental expectations and rights."

She fears retailers will profile casual browsers by combining in-store tracking with data from outside sources. The risk will rise as the technology improves.

"There's no expectation of privacy when you go into a mall," one shopper-monitoring executive retorts.

A better answer is that retailers such as American Apparel are analyzing groups, not identifying individuals. Cameras set up to do anything fancier than traffic-counting are confined to a few test stores.

Mobile-telephone trackers identify telephones, not their owners, says Will Smith of Euclid Analytics. Still, Euclid recommends telling customers that tracking is going on.

"Companies that succeed in this space are companies that address privacy correctly," Smith says.

 

-- The Economist

Republished from the Winnipeg Free Press print edition February 13, 2013 B4

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