From the Publisher: Right on track?

Seth_MendelsonThere is a fine line retailers must walk when choosing to employ in-store tracking technology. 

An article in The New York Times discussed both sides of the growing debate over in-store tracking of consumers.

While the article focused primarily on department store chains and their attempts to follow shoppers through their stores by using video surveillance and Wi-Fi signals from their cellphones, it could have an even greater impact on the supermarket industry.

Using technologies now available, retailers have the ability to track their customers’ movement in store and watch their shopping patterns. Using video, merchants can determine how different types of shoppers (i.e. age, sex) shop the store and where they spend the vast amount of their time, not to mention where they make most of their purchases.

The upside is tremendous. As the article states, information gathered by these technologies can encourage retailers to change their store layouts to satisfy consumer demands as well as help retailers determine the proper size for individual sections and how much product needs to be included in those areas.

The benefits for the grocery store are many. Supermarkets can profit simply by knowing how much time different types of consumers spend in various sections of their stores, which will allow them to determine the size of the section and what are the most popular areas or products. Some programs can actually help retailers encourage consumers to walk down one aisle or another based on where they are at a particular moment and how long they spent there.

The technologies also allow brick-and-mortar retailers to keep pace with their digital counterparts. As we all know, every time a shopper makes an online purchase, the online retailer gets key data through the use of “digital cookies” that can help with future sales. Now, traditional retailers can somewhat keep up with digital retailers in knowing more about their customer shopping patterns.

However, lets be very clear here. There is a downside to tracking customer-shopping behavior. To be frank, many consumers consider it downright creepy that a retailer can monitor their movements throughout the store. In this day and age where everyone is talking about government surveillance, shoppers may believe that this is an intrusion into their personal lives and one they may not want to tolerate.

The result, of course, could be a decision by customers to stop frequenting the stores that monitor their in-store travels.

Yet progress is inevitable and retailers are going to have to make their customers understand that tracking them is designed to help improve the shopping experience, perhaps even by offering them better deals through the various technologies. Therefore, it is important that retailers do not hide the fact that they are keeping an eye on their shoppers and they share the data gathered with their customers.

One day, I predict, it will be commonplace to gather consumer data this way. Getting to that point is the hard part. 

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