How retailers track your every move in exchange for coupons and convenience
Once upon a time (in February 2020), you could walk into a store, casually browse its wares, and try things on, making sure they fit and felt right before you decided to buy them. Maybe you joined a few friends for social interaction over coffee at the in-store cafe. You could even buy things in relative anonymity using cash.
Online shopping eschews this experience in favor of data-driven convenience. Physical stores were already losing ground before the pandemic drove customers away, and now they’ve had to accelerate their efforts to build out their online and contactless offerings before they’re put out of business for good. Curbside pickups, mobile apps to order and pay for products, even virtual changing rooms have become routine and are likely to continue long after the pandemic ends.
That’s not necessarily a bad thing for customers. Brick-and-mortar stores with expanded digital sides have a larger selection, provide personalized recommendations and deals, and give you the ease and safety of shopping without having to leave your living room. But taking shopping out of shops means customers can’t feel, smell, or taste products before they buy them, or ask a real human salesperson for advice or information. Some things can’t be reproduced inside a mobile app.
Another major and meaningful downside is the continued loss of your privacy. Retailers love data, and their online arms can give them a lot of it about you and your shopping habits. The more a retailer knows about its customers, the more likely it is it will be able to sell them its product. This was true long before the internet existed, but the internet has given companies the ability to collect so much more information about their customers and how to advertise to them.
The changing retail landscape isn’t just about the end of flagging brick-and-mortar stores; it’s also about the growth of data-driven retail. Stores can collect and use customer data that inform every stage of the shopping process, and they’re getting better and better at it — which in turn means that customers are more likely to buy more things and give stores even more data. Anonymous shopping is fast becoming a thing of the past. The future of the department store — assuming it has one — is here, and it wants to know everything about you.
Retailers have many ways to acquire data about their customers, some of which is more obvious and mutually beneficial than others. They might purchase “insights” from location data providers that track foot traffic into and out of their stores — or into and out of their competitors’ stores. Many of these location data companies acquire their data through trackers placed in the code of unrelated apps, with customers being none the wiser that they’re there at all. Cellphone providers have also been caught selling customer location data to seemingly any company that’s willing to pay for it.
Retailers may also use data brokers to market products based on whatever demographics or interests those brokers have assigned to you from whatever data they’ve collected about you. Oracle’s Data Directory, for example, includes more than 150 companies that help businesses target their ads to people based on categories such as income level, homeownership, political affiliation, and hobbies. For instance, a retailer can send a list of customers to a data broker and have it matched with its “new parents” audience segment, allowing the company to send diaper ads or coupons to customers who are very likely to need them.
Several years ago, Nordstrom got in trouble with customers when it revealed people were being tracked via strategically placed sensors that picked up their phones’ wifi signals as they walked through the company’s stores. These services can collect the unique and unchangeable ID numbers from devices, allowing them to build a profile of the device’s owner over time and repeat visits.
