If, when shopping, an advertising poster looks over your shoulder, price tags show exactly calculated prices, and the cash register already knows the buyer by name, then this is modern shopping, which many chain stores are now trying to implement. Tracking in traditional trading is all about trying to get hold of the analytics that internet platforms have. However, it does not do without technical control of the clientele.

At every step

A lot of noise was made by the news that advertising signs with face scanners in 41 Real supermarkets collected data on the age, gender and length of stay of customers in the checkout area. The image data was deleted almost immediately, but the anonymized metadata was sent to the Augsburg-based developer Echion for further processing. All the assurances of Real and Echion turned out to be useless: after a protest and statements from data defenders, the signs had to be removed.

Total control: how supermarkets monitor customersIn a press release, the retail chain expressed its regret: the measure was agreed by the Bavarian State Data Protection Office, while “always ensured” compliance with the provisions of data protection legislation. However, “in order to achieve maximum transparency and acceptability for customers and the public, further technological developments will be considered in close cooperation with Real’s client advisors and focus groups.” That is, clients must resolve the issue of tracking them.

However, the “dancing with a tambourine” around spy advertising signs cannot hide the fact that many stores have long monitored every step of the buyer between the shelves with goods, while analyzing buying behavior in real time. This is not only a direct threat to data protection and information self-determination. The desire to control the client and collect information about him is the way to new opportunities for manipulation, which were previously known to us only on the Internet.

Buyer’s companions

To understand how successful in-store tracking (In-Store-Tracking) is, a brief digression into control technology is enough. Retailers in Europe mainly use four types of tracking. Firstly, with the help of cameras, the flow of customers is measured and their routes through the store are indicated. The disadvantage of this method is the high cost of installing cameras and the complexity of data processing. More often (and more reliable from the point of view of data protection legislation) so-called Wi-Fi tracking is used, in which the radio signals of smartphones are caught and, using triangulation, their location in the room is determined.

Since unique MAC addresses are also fixed in this way, individual identified clients can be found again on a subsequent visit. This approach can be called proven and inexpensive, but it is not very accurate. Bluetooth beacons and mobile phone data can provide additional accuracy in customer presence and route data. In addition, users of client applications can (invisibly) consent to the personalization of this data – and, for example, using ultrasonic signals, they can be uniquely recognized, located and lured with a personalized offer.

All approaches are designed so that clients are generally oblivious to data collection. The history of their journeys through the trading floors, or Customer Journey (a special term for a customer’s long journey when choosing purchases), is written by corporations.

Short dictionary

As in all areas of marketing, in the field of sales analysis (Retail Analytics) there are many borrowings and neologisms that require explanation.

> Dynamic Pricing (or price discrimination, individual prices). With electronic price tags, this is also possible in a brick-and-mortar store: customers who make a large number of purchases see higher prices, while thrifty shoppers see lower prices.

> Beacons are mini-transmitters distributed throughout the store (usually Bluetooth) that connect to customers’ mobile devices, RFID tags on goods and baskets and track their movement.

> Conversion Rate (conversion rate or withdrawal rate) – describes the proportion of store visitors who become customers. Through tracking, their quantity can be controlled in real time and optimize the operation of the store, offering a more intensive customer service.

> Electronic Shelf Labeling – digital price tags and product information plates that display personalized prices for active shoppers.

Total control: how supermarkets monitor customers

people counting

What “digital transformation in retail” looks like in practice, Crosscan’s tracking specialist explains to CHIP. The Witten-based company, among other things, has equipped Esprit, WMF and Intersport stores with sensor networks and a corresponding analytics platform.

The technical “heart” here is the Crosscan 3D Peoplecounting sensor, which counts the number of people entering the store with high precision using dual cameras. Wi-Fi tracking has been discontinued by Crosscan since newer mobile devices started randomizing the MAC address by default.

The attendance data provided by the sensors is collected and evaluated on the Crosscan Connect analytics platform along with other data such as weather or cash register systems. And the store management receives information about the mechanisms that affect spontaneous deviations, and about the possibilities for improving work. Guidance is provided through the Crosscan app, which also displays store performance data.

Total control: how supermarkets monitor customers
Customer counter
Scanmarketing uses thermal imaging cameras to analyze the movement of shoppers

“Our services are primarily designed to determine the price reduction quota to the hour, optimize the use of personnel depending on the number of visitors, adjust the opening hours to the needs of the client, optimize the placement of goods and check the effectiveness of promotional activities,” — the company tells CHIP magazine.

Such practices are important in countering retail churn.
New AI-powered forecasting methods are set to make retail even “more predictable and manageable.” This could also be of benefit to shoppers, for example, by properly regulating retail space and reducing waiting times. Meanwhile, sensors are already being used that analyze buyers by age and gender.

Curious advertisement

Data protection and consumer rights experts, however, keep a close eye on such intrusion. “This trend is highly questionable, since with the use of such technologies, customers can hardly object to the processing of their data,” writes the data protection officer from Berlin.

What is allowed in the virtual world, apparently, will not be possible in the real world for a long time: “On the one hand, the full legality of online tracking, which has already become a mass phenomenon, is highly questionable. On the other hand, it is precisely because of the massive spread of online tracking that a person should be given the opportunity to make purchases anonymously, at least in the real world.”

Total control: how supermarkets monitor customers
Store performance at a glance
The Crosscan app, based on data received from sensors and external sources, displays the performance of the store in real time. In the picture: the number of visitors depending on weather conditions

While when shopping online, a customer can choose among a variety of stores and protect against tracking mechanisms using blockers, there is no magic cure against covert interference in the real world. In addition, the choice, for example, in grocery stores in most cases is very limited.

In the office of the Commissioner for Data Protection of the state of North Rhine-Westphalia, they believe that the video is the most doubtful. “This is about baseless collection of information with a huge scale of leakage.” The question of the legitimacy of such actions requires clarification. The wide coverage of MAC addresses in Wi-Fi tracking may soon be over in any case. “Since we are talking about personal data, according to the current legislation, they can in principle be collected only with the consent of the persons concerned.” Although purely for measuring visitor flow, they can still be maintained in the short term. But it is likely that the expected amendments to the EU E-Privacy law in 2018 will set new accents.

Situation of uncertainty

Are European stores following customers? This question is difficult to answer. In response to the CHIP survey conducted among retail chains, silence was received for the most part. Only two networks took part in the survey, but rather to no avail.

The numerous responses of data protection officers became more revealing: for them, tracking is a hot topic, especially the use of MAC addresses. But from 2018, this may be put to an end with the adoption of amendments to the EU law on the security of personal data (E-Privacy), for violation of which the article threatens.

However, when iOS and Android devices randomly determine MAC addresses by default, Wi-Fi tracking will be at least technically obsolete: masking corrupts tracking companies’ location data, individual visitors are counted several times.

Without bright prospects

It remains to hope for protection. Indeed, in particular, in the United States, they are now striving for the universal digitization of retail space, that is, the merging of data processing capabilities and the information wealth of the Internet with retail, which in the long term will still occupy a large market share. As if on purpose, Amazon’s record figures in 2017 reached 90% of the total turnover in traditional trade.

Total control: how supermarkets monitor customersSo, Google has already announced that it wants to link the geolocation data of app users with the activity of their credit and debit cards. A dream for advertisers to be able to trace the Customer Journey from the browser to the checkout and influence it. Through various channels, Google has access to approximately 70% of all card payments made in the United States.

Therefore, individual distribution of data in Europe is not yet possible due to data protection laws. However, if customers voluntarily leave their data in order to make a bargain, there will be no benefit from this. Who can control all the ways in which personal information gets into the web of international data trade?

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PHOTO: Fotolia; manufacturing companies