High street shops are studying shopper behaviour by tracking their smartphones or movement
|
Version 0 of 1. If you walk into, or leave for that matter, the Crocs store on New York's fashionable Spring Street, a small device will register your presence and, later, your departure from the store. In fact, if you're a Crocs aficionado, this will happen to you in almost half of all their stores around the world. Some stores are also piloting technology by ShopperTrak, where your movements might be monitored. This can mean anything from devices using signals from your smartphone tracking your movements around the entire store to whether you go to a specific part of the store where a device will, again, note your presence in the area. Crocs, amongst other retailers, are implementing such technology in order to compete with online retailers who can offer customers specific items based on your activity across the internet, tracked through virtual cookies. ShopperTrak's chief sales officer Kevin Kearns said online retailers (such as Amazon) were one of the reasons why interest in the area of "physical analytics" is growing rapidly; the company grew 61% last year and 42% the year before, with brick-and-mortar stores wanting more than ever to understand customer behaviour. Since online retailers have been able to do this for years, stores are only just balancing the scales, Kearns said. He told the Guardian: "When you look at something on the web, you get ads that pop up and follow you around - companies like that have much better advantage over brick-and-mortar retailers and so they're under more pressure to equalise the playing field." The concept is simple - there is a revolution happening in retail stores, where the emphasis is no longer on building revenue through opening new stores but maximising revenue <em>within each store</em> by using space efficiently. In some ways, this is an area that Apple has dominated, with their stores last year performing seventeen times better than the average retailer. How does it work? It's all about collecting data, really. ShopperTrak's core technology (their 'managed service') measures how many people are in a store at any given time through small devices placed at the entrance of stores, such as the ones placed in some Crocs stores. The technology contains two lenses that heavily pixellate the output, so the shopper cannot be identified. They can also change the height threshold to discount any children that have walked in. The point of counting the number of people in a store is simple, according to Kearns. For example, a customer that gets irritated because there aren't enough staff to serve them leaves the store, amounting to a large sum of lost potential revenue. This way, companies can match up predictions of how many people will be in a store at any given time (based on past data) and suitably employ enough staff to be able to properly serve their customers. This is just smart business - people can shop online but many choose to shop in stores for the customer experience. Attempting to maximise customer satisfaction is no bad thing. In addition to their "managed service", ShopperTrak provide customers with interior analytics, and this covers anything from installing the same "counting" devices from their managed services to other parts of the store (to monitor foot traffic in specific sections) to a service that uses a customer's bluetooth to monitor their in-store behaviour. This helps retailers understand how many customers walk in before quickly walking out, how long they stay in stores, and even how many hang around a shop front looking at banners before deciding whether or not to walk in. Yet, as Kearns concedes, this technology works only if a user is carrying a mobile device with bluetooth enabled (they're working on using wifi signals soon). Another area where retailers see the value of such technology is understanding what attracts customers to different parts of a store. Kearns explained: "One goal is to analyse the patterns of the masses so that the retailers can better serve them." So, for example, if a retailer thought a table was important and wanted to see the best place to locate it, they could experiment using ShopperTrak's technology to see which area of the store the table drew the largest amount of traffic. This idea could be expanded to all areas of the store. Which areas are most frequented? Does a messier or cleaner environment draw more customers? How about the number of items on show - do the clientele prefer minimalism? The technology allows managers to understand what works and what doesn't. How should retailers keep customers happy? The example of Nordstrom is demonstrative as to how customers regard this technology. When it was revealed that the American retailer had been using in-store tracking from Euclid Analytics for over half a year, public outcry forced them to stop their monitoring. Customers did not know what was happening and considered the real-time tracking to be 'creepy'. The lesson was clear: explain what is happening openly and also how customers will benefit. After all, retail customers have been juggling a compromise between privacy and benefits for decades. Loyalty cards, for example, let companies know what they are buying. In return, they get better deals based on their shopping habits. ShopperTrak, meanwhile, scrambles the customer's media access code (MAC) address, taken from their smartphone and gives it a separate identifier. They don't keep any of this data and therefore cannot aggregate information about a specific individual. Although people appear to be more relaxed about internet cookies tracking your online activity, the public are not willing to be monitored in person, especially against their knowledge. If Nordstrom had been transparent and upfront about the information they were gathering, would there have been an outcry? Probably not. I'll look to provide visual examples of the information Euclid Analytics provide to its consumers to demonstrate the limited data available in a future post. Nearbuy Systems, another analytics company in the field, may have clocked on to a more intelligent response. Although the company provides technology similar to that of ShopperTrak and Euclid Analytics, Nearbuy's founder, Bryan Wargo, told the Guardian the majority of their clients, retailers, want to provide a more personalised shopping experience - but only with the consent of customers. In order to do this, Nearbuy work alongside their clients, including UK-based Kiddicare, to provide wireless access in their stores. If customers create accounts on the wireless network - something millions have done - they first have to accept terms and conditions that opts them in to having their movements monitored when inside the stores. Users can then add their loyalty card numbers to receive personalised recommendations. "So it's actually much more privacy-forward than what you see in the online world and generally in the other advertising space," Wargo explained. Concerns will remain, however, that many customers will seek out wifi and happily accept terms and conditions without reading through them. What's Apple doing to get involved? Apple's new mobile operating system will no doubt contribute to the rise in physical analytics. As part of iOS7, they introduced iBeacon, an important feature that failed to generate much attention (including by Apple themselves as their latest keynote). The technology means that stores will be able to interact with customers from the moment they think about entering to the moment they pay for their goods. Breaking it down, a combination of Bluetooth Low Energy (BLE) and beacons (wireless sensors) placed in physical locations will allow companies to send people outside a store discounts directly to their phones in addition to sending directions to find specific goods inside a store. Customers might even be able to pay for their goods using the technology. If companies can get customers onside <em>before</em> they implement this technology, they're on to a winner. If not, wait for the outrage. <em>Do you think physical analytics only levels the playing field between online retailers and brick-and mortars stores or is it one step too far? Have your say below or join in the debate on Twitter either with me directly @sirajdatoo or our official account @Guardiandata</em> Our editors' picks for the day's top news and commentary delivered to your inbox each morning. |