In the mid-19th century, retailers eased this strain by introducing “posted prices.” Stores earned loyalty with a mix of “protection and privilege.” Protections included guaranteeing transparent prices and customer satisfaction. Stores cultivated an “egalitarian form of privilege,” offering luxurious environments and attentive service in order to make people feel special.
In the 21st century, retailers focused on niche markets to compete with Walmart, whose purchasing clout and efficiency made competing on price an impossible task. To identify which valuable niche customers to target, industry insiders argued, stores had to collect data on shoppers.
“Retailers are focused on exploiting what they know about specific individuals to encourage their loyalty and to sell them products.”
Internet retailers like Amazon spurred real-world retailers to take on an additional goal. Aside from such advantages as unlimited shelf space, online merchants enjoyed a considerable edge in their ability to track shoppers. An e-retailer could follow the items shoppers looked at on its website and show them related items. It could track buyers to other sites and present ads for items they’d looked at on the first site. To compete, brick-and-mortar stores needed to mimic digital tracking. The door to that power opened in 2007, with the introduction of the Apple iPhone.
Data companies such as ShopperTrak and Euclid offer technology that enables stores to exploit Wi-Fi or Bluetooth to link with shoppers’ smartphones. If a phone carries the store’s app and activates Wi-Fi or Bluetooth, the store can follow that phone through its aisles. The retailer records how long an individual shopper remains in the store and, by tracking general traffic, managers can then direct clerks to aisles where they can be most helpful. The retailer also sends ads or coupons to shoppers’ phones.
Bluetooth Low Energy
The innovative company inMarket offers a tactic using a newer Bluetooth technology – Bluetooth Low Energy, or BLE. Stores install inexpensive BLE “beacons” on the selling floor to detect inMarket’s code in smartphone apps. Then inMarket embeds its code in retailers’ apps (which consumers download to get information, like sales notices) and forms partnerships with other firms – like WebMD or publisher Condé Nast – to include their code in the inMarket app as well.
“Of particular interest to advertisers is the web’s ability to identify certain aspects of the person receiving that message even without the person realizing it.”
If, for example, you shop at a Marsh supermarket, a beacon wakes the Marsh app on your phone. If you don’t have the Marsh app, the beacon wakes a partner’s app, which supplies the ads. With the inMarket app, retailers and “brand manufacturers” can track consumers to specific “retail locations” or anywhere the retailer wants to follow or find likely customers.
In 2010, smartphone manufacturers outfitted their products with global positioning system (GPS) chips, which – among other functions – enabled retailers to track shoppers beyond the walls of their stores. Next, inMarket offers a service that continuously tracks app-carrying phones in a relevant area. Stores specify certain geographic coordinates. When a phone enters that zone, inMarket sends it an ad.
“Walmart can identify Twitter users who are millennial moms who shop at Walmart for soy milk and gluten-free bread.”
Another geolocation company, xAd, tracks consumers’ locations and attempts to deduce a shopper’s reason for being in a store. This provides retailers with clues to the most promising advertising targets. Retailers can even target shoppers who enter a competing store and try to lure them away with enticing ads.
Eventually, retailers may be able to follow customers into their homes by exploiting “the Internet of things” – networks of smart appliances and remote control devices. Under this scenario, marketers would open a new channel of data on consumers’ “habits, lifestyles, and even personalities” by monitoring a person’s networked refrigerator or thermostat. Marketers foresee the development of smart products, such as a talking food package that could recite its expiration date and tell its owner where to buy more. Some retailers and data firms see wearable technology like the Apple Watch as the next frontier in customer tracking and profiling. Marketers value wearables because users are likely to wear them – with the store apps they’ve downloaded – all the time. That lets retailers and advertisers follow shoppers to gather continual data on their habits, location, buying patterns and health.
“Macy’s has implemented lots of testing to encourage optimal customer in-store involvement as well as to gather data toward understanding shopper patterns and personalization.”
Another emerging technology, facial recognition, uses cameras to identify consumers. It will work even with consumers who do not enable Bluetooth technology. Experts from companies experimenting with this technology say it will identify preferred customers and analyze individual shopper’s emotions.
The “Hidden Curriculum”
Retailers’ newest priority is coaxing shoppers to acquiesce to monitoring. To that end, the retail industry is helping to institute what educational theorists call a hidden curriculum. In education, the term refers to any knowledge, values or behaviors that schools teach implicitly, not explicitly.
“The intimate, always-connected nature of the wearable device will virtually guarantee continuous tracking across time and space.”
Theorist George Gerbner described a hidden curriculum’s purpose as establishing “the rules of the game of life that most members of a society will take for granted.” Retailers hope to disseminate a hidden curriculum that teaches that giving up your personal information and accepting surveillance and discrimination in exchange for convenience and coupons constitutes basic “common sense.” One of the tactics retailers use to promote the hidden curriculum is to redefine the concept of customer loyalty. In the past, stores cultivated loyalty by offering discounts and other perks to good customers. To qualify as loyal, a shopper had to make purchases consistently or frequently. But now stores add a new qualification: You must share information about yourself.
The aim of all this tracking is to build profiles of individual shoppers and to use statistical analysis to rate their “attractiveness” to the retailer. The retailer then targets the most attractive customers with offers and discounts designed to keep them coming back. Less-valuable shoppers may receive personalized discounts to motivate them to become more desirable consumers. Top-ranked shoppers receive the best perks and privileges, analogous to the benefits that first-class passengers and frequent fliers get on airlines.
“There is a new emphasis on gathering behavioral and attitudinal information in order to predict how specific people will respond to various shopping situations.”
The cosmetics retailer Ulta Beauty, for instance, uses its loyalty program to compile a database which now has profiles of a million members. The company learns about its members by using cookies to monitor their online activities. Ulta Beauty purchases information from third-party data outfits, tracks the location of consumers’ smartphones, and allows its members to log in to their accounts by way of Facebook or Google+. When a customer logs in via a social network, the site gets access to such information as the user’s birth date, likes and list of friends. When a member visits a store, a clerk accesses his or her customer profile using an iPad. The clerk can identify preferred customers and immediately tap into their purchasing histories.
Discriminating retailers highly value influential customers. The jewelry store Alex and Ani, for instance, ranks the value of customers not only according to how much they spend but also by how much sway they have over other likely customers.
“While many, if not most, loyalty programs can offer real value to shoppers, their unstated aim is also to train people to give up personal data willingly.”
The store assesses shoppers’ influence by, first, identifying customers who have the most people in their social networks. It then cross-references that information with data from a tool called Radian6, which collects millions of comments about products from Internet discussions. Alex and Ani uses the profiles it compiles to determine what individual shoppers will see when they visit its website or open its app.
- Consumers overestimate the government’s ability to protect their privacy– Most are unaware that it’s legal for marketers to sell personal information or to offer different prices to different shoppers.
- Most consumers are not comfortable with tracking – Most people don’t want to receive personalized ads or discounts. Old and young Americans share this attitude.
“By doing the right things and having the right purchasing patterns, you will be rewarded with the best product suggestions and the best prices online in physical stores.”
New regulations could slow the progress of retail monitoring. In 2016, the Federal Communications Commission suggested that Internet service providers shouldn’t be able to share data about consumers unless individual customers actively give their permission.
The best approach would be to require such an opt-in for every company that collects consumer data. The government could require that when a user downloads an app, the retailer must send an email clearly explaining how it will use the data it collects. The app could begin collecting data only after the consumer agrees.
“As retailers, technology companies and brand manufacturers negotiate new ways to glean information about people and implement marketing efforts based on that data, the one party who has no say in the matter is the shopper.”
Starting in middle school, students should begin to learn how digital media and marketing work. They need to be familiar with industry jargon and to be able to identify important people in the field. Journalists, teachers and parents should educate the public about marketers’ hidden agendas and reveal what lurks in privacy policies. Such initiatives may spur public pressure to “level the playing field” for consumers and marketers.