In 2014, it shouldn’t come as a shock to hear that retailers are monitoring your movements and actions when you shop online.
Online stores commonly track your cookies (check their privacy statement) to find out where you’ve been, what you’ve searched for and what you purchased. Experts call these data points “bread crumbs.”
It’s no accident, for example, that Facebook shows you ads for products that you previously glanced at on other sites or that Amazon remembers your previous searches or purchases and then recommends other items.
When it comes to physical storefronts, however, retailers are largely unaware of where shoppers go and why.
“We have a blind spot,” says Brian Kilcourse, a managing partner at RSR Research. “Retailers can see a tremendous amount in the digital domain, but then shoppers go to a store and they disappear.”
Today, retailers are trying to make shoppers re-appear by enhancing their data collection efforts at a variety of commercial touchpoints.
When I purchase a video game at an electronics chain with my credit card, for instance, my card begins leaving a trail of digital crumbs, like my location, age and other demographical information. If I purchase more items with the same card, the store starts to assemble a purchase history and a profile of me as a customer. If it’s a dynamic retailer that understands the importance of omnichannel marketing, the store is also pulling in my shopping activities from its website and mobile app. Then, if I use a loyalty program, I’m usually volunteering to give the chain more information about my preferences (Do I prefer to whole milk to skim milk? Am I looking for new shoes this season?) so they can offer me more shopper-specific deals.
“Retailers lure you to download their app because that helps to recognize you and your preferences and your location,” says George Lawrie, a vice president and principal analyst at Forrester Research. “Instead of just looking at the bar code and the merchandise in the stores and trying to optimize the merchandise, they’re trying to learn more about the people themselves.”
While retailers are plenty happy to know more about your preferences, that information can be futile if discovered at check-out and not during the shopping process. While stores will try to sell you small trinkets in the check-out aisle, chances are they’re not going to sell you new TV on your way out.
“Here’s the rub,” Lawrie says. “Often, you don’t present a loyalty card until end of transaction, and then it’s too late.”
How consumers benefit
Retailers and CPGs (consumer packaged goods companies) want to preempt a last minute up-sell during the purchase process. Instead, they aim to tailor deals to your preferences while you’re in an aisle.
“For CPGs, 70% of brand decisions are made at the aisle level,” says Patrick Connolly, a senior analyst at ABI Research. “If you know from a users’ in-app shopping list that they are buying red wine, not only can you influence them as they stand at the wine section, but perhaps you can also influence them if you are a related product.”
Aside from user-generated preferences, major retailers have a variety of more clever ways to find out what products pique your interest and what ones fall flat. Your smartphone, for instance, can be used to track your movements through a store. If you’re using a retailers’ app during a store visit or log onto store Wi-Fi, there’s a good chance that store is picking up signals from your device and discovering what displays you hovered over.
Retailers are also experimenting with data-processing cameras that can locate customers within a store and map their movements, storing the customer as a data point and not an image. RetailNext, for instance, is a California-based company that manufactures video software capable of differentiating shoppers and remembering them on return visits.
While 77% of shoppers in a recent study by Opinion Lab said in-store tracking is unacceptable, 61% also responded that they expect to be compensated with cost-saving discounts if they’re tracked.
How stores sell in-store tracking to shoppers and highlight its benefits is where one of the next major battles of retail will be fought, Kilcourse says.
“It’s all about relevance,” he adds. “Consumers have shown over the years that they’re quite willing to give up information about themselves if the resulting solution to their lifestyle need is relevant. It has to be at the right moment in time and the appropriate solution at the right price.”
For example, Kilcourse says, a mother on a budget who needs to put food on the table is most likely going to be interested if a grocery store’s technology recognizes her, pulls up her profile and offers her a personalized discount on food items that she’s expressed interest in purchasing. That sort of deal isn’t possible without data aggregation and shopper recognition software.
“A trend we see is retailers making it easier for consumers,” says Omer Minkara, a research director at the Aberdeen Group. “I don’t want to spend countless hours searching for the best service for my needs, but retailers can reach that need more effortlessly by personalizing interactions.”
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