Tracking Customer Movements in Stores

Footstep tracking in stores: New technologies bring new opportunities and dangers

Courtesy of the phone in your pocket, the store may be recording exactly where you are walking as you browse the aisles.

Creepy? …. or intriguing? Could be a win-win for both you and the store, if the stores do it right (think Tesco, as described in the book ‘Scoring points’). Could also be a huge privacy disaster.

The Economist Christmas edition contains a fascinating article describing the increased usage by retail stores of customer tracking technology (“Following the fashion” in the Dec 24, 2016 edition). The author describes technology that follows your phone around the aisles (aside: that’s just the tip of the iceberg) and poses the question of what retailers might gain from collecting such detailed data on customer in-store movements.

That question seems a bit too basic to me. The competitive advantages (and privacy concerns) for such step-by-step tracking within brick-and-mortar stores are very similar to those from tracking online browsing behavior on e-commerce sites. Should they so choose, retail stores need only look at the myriad e-commerce use cases for such customer path data.

As online companies have known for years, recording step-by-step movements gives much deeper insight into marketing effectiveness and product associations, as well as into the intentions, preferences and habits of thousands of otherwise anonymous customers. Such Big Data insights are much, much richer than those which could be gathered from simply analyzing point of sale data.

But brick-and-mortar retailers have access to an additional bag of tricks. Adding concealed store cameras and microphones, coupled with machine learning algorithms, allows retailers to link foot traffic with details of age, gender, ethnicity, and dialect of both the shopper and any shopping companions, including minors.

All of this will soon be more tightly controlled in the European Union by the General Data Privacy Regulation, which goes into effect May, 2018.  From that date, companies with EU customers will be more restricted in their collection and use of personal data, including data that can be linked to a smartphone.  In fact, fines for privacy violations can reach 4% of the company’s global annual turnover.

There will still be a rich value-add from analysis of footfall data, ideally benefiting the customer as well as the retailer, but it will become increasingly imperative that such data are collected and analyzed in ways that both respect the customers’ privacy and that shield the retailer from legal and reputational risks.