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March 06, 2017 8 min read 1 Comment

There was a time – pre-digital age – when the most outrageous way for retailers to impede on your bod was to count your eye blinks when you were attracted to a product on the shelves (the more blinks, the better).

Yep, back in the day, some stores would install hidden movie cameras behind the shelves that would film your pupils as they dilated.  Think of an Andy Warhol version of Candid Camera.

Little did they – or we – know what was to come. Today, brick-and-mortar retailers, desperate to retain you before you’re completely raptured to e-commerce, will practically inhabit your soul as you enter their doors.

It doesn’t stop there. New technology is following you around in ways that would make you blush. And the voyeurism doesn’t end when you leave the store. In fact, this story has hardly begun.

In his book, The Aisles Have Eyes, Joseph Turow investigates how retail stores use data mining, in-store tracking and predictive analytics to define us and influence the way we buy.

Joe is a Robert Lewis Shayon professor of communication and associate dean for graduate studies at the Annenberg School for Communications at the University of Pennsylvania.

Here, Joe tells Three Commas how retailers tempt us with discounts in order to collect information on us, and where this is heading in the very near future.

Ron: What’s the main difference between the past and the present when it comes to retailers tracking us?

Joe: The difference is that now, it’s personalized. Back then, it was generalized.

One of the larger points of the book is that we’re moving from an era of anonymity to an era of personalization. And even when people are told they are anonymous, the fact is that -- even if you have an anonymous profile -- you are being tracked. Anonymity in terms of not knowing your name may not make any difference at all.

Ron: Most people have no idea about this, right?

Joe: We have found in our surveys that that most people know they are being tracked, and companies are collecting data about them, in stores as well.

But they really don’t understand data mining and they really don’t understand the large number of data points that sometimes do get collected around them --  and how they can be adapted to predictive analytics. That’s another term for big data.

People also don’t understand the laws connected to this. For example, we found that most Americans think that it is illegal to charge different people different prices for the same items. It’s not.

Ron: How much of this is last-ditch effort? Brick-and-mortar retailers are trying hard to retain those physical, in-store customers.

Joe: A lot of it is hyper-competition. First, it was the competition with the online world.

But it really took off after 2011, when Amazon did this gimmick, you could say – where they told people to scan products in various stores, and if they really wanted to buy the product, Amazon would give them a discount.

Amazon was getting prices from all over the country, right before Christmas. It was a great thing for [Amazon], but it freaked out a lot of retailers.

That’s when [retailers] said, “We can’t fool around with this. We have to be able to bring the ability to track people into the store like sites do online, and begin to take the sites that they have seriously.”

There was a time during the turn of the 2000s when stores were afraid that their websites would cannibalize them. They would say things like, “Our website is for people who don’t like to go to Macy’s.”

Ron: Now, people are simply getting used to being tracked. It’s become normalized. It’s actually perceived as a trade-off, in order to get discounts and other benefits.

Joe: The prices the stores put on the racks are just the starting point. Those are never going to be the actual [final] prices. And then they have 40% or 50% sales. The feeling is that people want to get discounts.

Procter & Gamble has tried mightily over the decades to stop people from using coupons, and they failed miserably. JC Penney hired someone from Apple who thought he could turn the store around by having “everyday low prices,” and it just didn’t work for them. He left and JC Penney lost a ton and now they are trying to crawl their way back. They’re doing OK in general, but they realize they have to have [specific] sales.

Loyalty is just an excuse to get data, but at the same time, it’s to give [customers] a sense of getting dollars off here and there.

Ron: What about the “Acceptance of Terms” click? Does anybody ever read them? What are we actually agreeing to?

Joe: Nobody wants to be bothered reading all that legal mumbo jumbo. Privacy policies are almost never read. Studies have shown that. If they really tried to read them, they would be spending hours and hours of their lives.

Lawyers have told me that they are basically contracts. They’re  not made to be read. They don’t expect that anybody would understand them. But if people slog through them, they’ll see that stores, in many cases, say that they are following you around, they are tracking what you are doing online, they’re maybe buying information about you.

They may even find out what you are saying about them on the Internet. Then they put all of this together, sometimes using psychographics, to “score” you.

Then they are changing the prices for you, with discounts. And if they are doing it in the store, with beacons and lights and other vehicles, they are changing the price as you walk through the store, on your smart phone.

Ron: Should you turn off your smart phone before you walk into a store?  Does it even matter?

Joe: You can go off the grid by turning off your WiFi and your smart phone. But it’s not just that. If you do that and you’re not using your frequent shopper card, you are losing a fair amount of money, particularly if you are in a supermarket. If you don’t use your frequent shopper card in the supermarket, you may lose like 20%.

But if you are using your frequent shopper card, you are giving your whole history to the supermarket. And if you are doing that, it’s amazing what generalizations that companies can come up with.

The Kroger [supermarket chain], for example, owns a very sophisticated data and analytical operation. They can just take your purchases and infer lots of different things. For instance, you may not know that it’s legal to keep records of people’s non-prescription drug purchases.

It’s hard to see this in the privacy policies, but they’ll sell your data to data brokers like Experian and Axiom. Companies like that will then turn around and sell your offline behavior to companies that link it with your online behavior. The difference between online and offline today is very blurred.

Ron: So this tactic must be a raging success, if the retailers are flocking to it and you’re writing a book about it.

Joe: I think we have to put this in perspective. Much of this is experimental. There are many stores that do this. From what people tell me, there are hundreds of thousands of Bluetooth beacons around the world.

But if you talk to people in the business – and I make this clear in the book – they see this still as an experimental phase.

They’re still working their way through it. They’re still trying to figure out things like, how many messages should you send someone when they first walk into a store? How many times should you discount products as you walk through the store? What kinds of geo-location messages should you send them?

There are lots of issues about how we define return on investment. The problem of getting people to get the right Bluetooth app on their phone is that some stores don’t have enough scale to have their own Bluetooth. Lord & Taylor, for example, uses other Bluetooths that tie into Lord & Taylor.

Ron: So this is truly only the beginning.

Joe: We’re very much in the beginning of an era. We’re not anywhere near where everything is so cut and dried at this point. Companies that do it claim that it works for them. Many of the companies that run the beacons and run the various technologies argue that it works.

General Electric and Phillips are into the idea of changing lighting systems in stores so that you don’t even need a Bluetooth device – the lights themselves will go into the camera of the phone and ignite your app and do the same thing – help the stores track you around. But we’re still very much in the early stages.

Ron: How would technology like this be used by smaller pockets: entrepreneurs and small businesspeople?

Joe: There is a company called Perko that does credit card relationships with small and medium-sized businesses. And they actually have a beacon project, for example, that allows a small or medium-sized retailer to put a beacon in the store, which can alert the owner when a customer walks in, with information that will allow the owner to know how to greet them.

I think it’s true that companies like Macy’s and Target and Wal-Mart and Walgreens are deep into figuring out how to track people. They are very much engaged in that now, on many different levels.

Walgreens, for example, was working with Google to create a cart where, as you walk down the aisle, it shows a map on a video screen that talks to you personally, based on your history, about various products around you, and maybe gives you discounts.

So yes, this is a big deal for big companies. [Smaller players] might want to get involved in it. The trick is to do it without going bankrupt. You have to figure exactly how it works and what you can get out of it.

Ron: Meanwhile, on the consumer side, a general ignorant bliss continues.

Joe: A lot of people still don’t get it. A lot of people in the federal bureaucracy don’t really focus that much on retailers. The focus has been on advertising on the web, and, of course, on the NSA and government surveillance.

What I argue in the book is that, on a day-to-day basis, people are learning the hidden curriculum. They’re learning that giving up data in the 21st century is going to be the norm. So, in a sense, what retailers are doing is that they are neutralizing data, teaching people that data is something that you give up, because you have to give up things to get along.

In the Trump era, it is unlikely that there is going to be a whole lot of legislation that is going to affect this. The big threat to American activities in this regard is coming from Europe. The Europeans are trying to figure out how to better control this sort of thing. European privacy policies have the ambition of being stricter.

There are ways to get around it, though. The retailers are shaking in their boots about this, but we’ll see what happens.

Ron: In your research for the book, what knocked you for a loop?

Joe: I learned a lot more about beacons than I ever knew. The most interesting aspect for me, and I think the one that is going to grow the most, is geo location marketing.

It’s in incipient stages right now. There is a huge marketplace that is trying to reach people as they walk through the outside world, by getting into their text messages via various retailers.

Now retailers are trying to do things like this: if you go to a store, and the beacon sees that you are standing around a lawnmower for like five minutes, or an unusual amount of time, they may think that you are interested in that lawnmower.

As you leave the store and are somewhere in the parking lot -- or maybe a half an hour later -- you’ll get a text message from the retailer saying, “Hey, have you thought about this lawnmower again? We’ll give you 20% off!”

One retailer told me that if they start this, it could start a [price] war that could get out of control. If there is a potential to find out where people are [outside of the store], competitors could have a price war around that.

When you say yes to the app, you’re allowing that app to sell your location to other places and to target you based on what marketers are interested in. I think that’s potentially a really growing area.



Click here to find out more about Joe and his book.

1 Response

Matthew Kenney
Matthew Kenney

March 17, 2017

Wow , Very informative ..Great article!

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