A few months back, Forbes Senior Online Editor Kashmir Hill wrote about a decision by one retailer to remove its in-store analytics system. Philz Coffee – a San Francisco staple – had been an early success story for in-store analytics. Just three years prior, CNet featured an up-and-coming retail service – Euclid Analytics – and its promise to help retailers compete with online merchants. At the time, Philz Coffee President Jacob Jaber passionately backed the service, saying, “This is knowledge that’s important to understand.”
Fast forward two years to the outcry by Sen. Al Franken (D-MN) about Euclid’s tracking practices. As a result, many businesses dropped the service “like a hot privacy-invasive potato.” Eventually, by June of this year, Philz followed suit.
On Thursday, at the IAPP Privacy Academy and CSA Congress, Hill moderated a panel to dissect these sensitive but emerging issues in the breakout session Privacy in the Aisles: The New Age of Analytics. She was joined by Prism Skylabs CEO Steve Russell and Forrester Principal Analyst Adam Silverman.
Staying out of the negative, privacy-apocalyptic headlines is a priority for businesses, especially with something as controversial as in-store WiFi and geolocation tracking, not to mention the new world of Bluetooth Low Energy technology, currently being mainstreamed by Apple’s iBeacon.
Better to keep quiet about or stay away from such services, right?
Maybe not. “Retailers are in a knife fight and they desperately need these tools,” Russell argued. “Think about the difficulty of operating a business by managing what you don’t measure. Retailers don’t know what happens between when a customer enters the store and makes a purchase." Meanwhile, these same businesses are competing with online merchants with web tracking capabilities that follow an entire transaction.
Prism Skylabs offers an alternative to WiFi tracking by using existing in-store video systems to aggregate basic customer analytics, such as quantity of shoppers, to better understand the physical traffic of its clients’ consumers. The privacy pitch? No images are saved of individual people.
“There is sensationalism around retail analytics,” said Forrester's Silverman, “but it’s mostly because consumers don’t understand. They have privacy issues, but they don’t want to be private all the time.”
A case in point? Consumers are often willing to give up some privacy for benefits, Silverman said, including price breaks and other loyalty programs, but controls and notifications for the consumer are needed to keep them in the loop and feeling comfortable.
“It seems like industry best practice has been prominent signage when you walk into a location and it tells you the many ways in which you’re being tracked, but then the problem is, a lot of people don’t read signs,” said Hill. Create with Context's Ilana Westerman would agree.
Russell noted that, in Germany, a study found a high majority said they did not want to be tracked, but it didn't take much to overcome their objections and get them to opt in: “It was, provide a benefit and the benefit could be pretty minor; it could be using guest WiFi or giving a coupon.”
Now comes Apple’s pledge to randomize MAC addresses and their introduction of new iBeacon services.
“An iBeacon is really nothing,” explained Russell. “It’s the simplest thing in the world.” These little tags just broadcast a string of numbers and wake up a smartphone’s software to its proximity. “But what you do with those numbers,” Russell pointed out, “which app is looking it up, if an interaction is logged, if the location you are at is stored in relation to that number, all of that is what potentially might create privacy concerns; but as a technology it’s really no different than a bar code, or a QR code,” he said. “There’s just the potential that that collection can happen more passively.”
Silverman added, “Really, the logic comes from the company, not from the wireless technology.” So as retailers continue to grapple with these analytic avenues, beacons will become a new and major consideration, with new privacy perspectives to think about. “There needs to be a cohesive approach” to how you decide to use these tools, he said, including, perhaps most significantly, “building relationships with your customers.”
He added, “Retailers are eager to move forward – but they’re in that knife fight. Ultimately, the acceptance of in-store analytics will happen, in my opinion. But today, it’s a little bit disjointed and messy.”
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