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Retailers Track Smartphones to Study Customer Shopping Habits

By Wesley Fenlon

They know exactly how long you spend in the candy aisle.

Amazon's Price Check app encourages its loyal customers to cruise down to their local Best Buy or bookstore or clothing outlet, check out the goods in person, then price match them against what Amazon is selling online. And usually, Amazon is cheaper, so we buy online, and stores lose out on sales, even as they pay to keep lights on and air conditioning running. For retailers to fight back, they need more data about shoppers, and the way they're getting it actually mimics the practice of online stores like Amazon. Problem is, that means tracking their customers--and when tracking moves from an IP address to our physical bodies, we get upset.

Retailer Nordstrom recently tested out a tracking system that followed the Wi-Fi signals of its customers' cellphones. Those customers weren't connected to a local wireless network--as long as the Wi-Fi antenna in their phones were on, it would broadcast a signal searching for available networks. That signal could be tracked, allowing Nordstrom to determine what sections customers lingered in, their path through the store, and so on.

Image via Wavestore.com

The experiment ended in May. Shoppers who found out about it were, unsurprisingly, not too happy. But Nordstrom's hardly the only retailer with the idea. "All sorts of retailers--including national chains, like Family Dollar, Cabela’s and Mothercare, a British company, and specialty stores like Benetton and Warby Parker--are testing these technologies and using them to decide on matters like changing store layouts and offering customized coupons," writes The New York Times.

There are, naturally, entire companies devoted to this business. The Times mentions that RetailNext combines video footage from surveillance systems with Wi-Fi tracking, accurate down to 10 feet, to monitor customers' shopping habits. Another, Brickstream, sells special stereoscopic cameras to differentiate children from adults and help stores know how many checkout lanes they should open based on store traffic.

Stores have had surveillance cameras for years, and most shoppers aren't bothered by them. Similarly, our search histories and browsing habits are constantly mined by Google and online retailers to market products to us more effectively. Does it make a big difference if physical stores take that extra step?

To most of us, yes--but as retailers find more subtle or customer-facing ways to use the technology, more shoppers may embrace it. A company called Nomi, for example, uses Wi-Fi to track customers who have signed in on a local network or previously downloaded a store's app. It gives them personalized recommendations and coupons based on their interests and location in the store.

Minority Report's invasive, personalized advertising really does feel like an inevitability at this point. On the bright side, smarter retailers may mean more efficient stores with better sales, and that's good for everyone.