Rule #1 of location analytics in retail – don’t be creepy

Discussion
Feb 16, 2018

Brian Kilcourse

Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.

RSR’s first benchmark on location analytics in retail, published in January, showed retailers perceiving that consumers have grown impatient with an old-fashioned and impersonal physical shopping experience, and that is driving them to consider location-based intelligence to delivery a highly targeted value proposition to consumers.

Not so surprisingly, over-performers (“Retail Winners”, in RSR’s parlance) favored using anonymous location tracking data for a variety of operational decisions, more than their average and under-performing counterparts.

Source: RSR Research, January 2018

But we were definitely surprised retailers seemed more excited about using non-anonymous data generated by consumer mobile devices to target one-to-one value offers.

We were surprised again by retailers’ responses when asked the following: “Cellular network providers are working with data providers to establish a customer’s identity and other data and provide it to retailers — what’s your opinion about using that data?” Forty-one percent agreed it’s “a great idea!”

Why is that an issue?

Back in 2014, Forbes posted an opinion piece by Danielle Citron, a law professor teaching at the University of Maryland Carey School of Law, entitled “BEWARE: The Dangers Of Location Data.” In the piece, Ms. Citron explained, “Geolocation data tells us intimate, revealing details about people’s lives — their visits to drug treatment clinics, psychiatrists, prospective employers, and more. … It is subject to serious abuse, from domestic abuse and stalking to theft and discrimination.”

With many consumers likely not having since taken the professor’s advice and turned off their mobile devices’ default always-on location-based service capability, that pushes the onus to be scrupulous back on companies that collect, analyze, and use the data.

And that’s why we expressed a strong concern in the report about retailers’ naiveté. Only 53 percent of the biggest retailers think that consumers will be concerned that they might be tracked, and smaller retailers were much less concerned.

Because of this finding, RSR recommended that retailers painstakingly explain the risks around tracking technologies to help consumers decide if they want to opt in or out of any kind of tracking technologies. The report concluded, “What seems to be okay today may not be acceptable tomorrow. Err on the side of caution, and disclose, disclose, disclose.”

DISCUSSION QUESTIONS: Are you as enthused about the potential of non-anonymous location tracking to support personalized offers as retailers in the survey seem to be? How does the “creepiness factor” compare to Big Data and other technologies that stir up privacy concerns?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I doubt Gen Z or Millennials will feel the creepy factor; location tracking is de rigeur for many of the apps they have willingly installed."
"Creepiness will always define that territory where data is perceived as providing benefits that too fully favor the marketer."
"Limiting the tracking, enabling consumers to only allow tracking and personalization for a defined period of time, location, etc, could be a solution."

Join the Discussion!

17 Comments on "Rule #1 of location analytics in retail – don’t be creepy"


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Mark Ryski
BrainTrust

Location tracking seems unstoppable, but retailers should heed the warning by RSR. It’s not surprising that retailers think that location tracking is a good idea – they are self-interested, and it’s easy to rationalize how the greater targeting precision location tracking offers enables this. To a great extent, consumers and shoppers are simply uninformed about how their location data can be used and I suspect that many people would find it disturbing to learn how this “innocuous” location data can be used in very nefarious ways. Retailers should be very careful about how they undertake these initiatives. As Nordstrom discovered when their location tracking pilot program made headlines as a result of shopper backlash a few years ago — this can go terribly wrong.

Lyle Bunn (Ph.D. Hon)
Guest

Let’s face it, we are like frogs in the frying pan with the heat slowly increasing as far as consumer behavior tracking is concerned. The best uses of analytics provide noticeable value to the visit experience. Creepiness will always define that territory where data is perceived as providing benefits that too fully favor the marketer.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
3 years 7 months ago

Consumers, led by Millennials and Gen Z, are becoming more and more desensitized to location tracking in general, so long as they perceive a value exchange for this information with a business. This is why retailers are so positive on the concept. However, full disclosure is absolutely critical — it’s just too easy to make a mistake and not only lose credibility with your customer but also lose trust. It’s very difficult to regain those trust elements with a consumer. Consumers have plenty of choices and if they perceive a loss of trust, they’ll move on to another brand that they do trust.

There will always be a bit of a “creepiness” factor in location-based services, but I see consumers in the future will gladly accept this in exchange for value. Value, however, will be more than just a coupon or discount offer. In the near-term retailers will have to tread carefully here or they risk repeating the Nordstrom incident of a few years ago.

Nir Manor
Guest

The right way to use location-based promotions is to target shoppers that downloaded the store mobile app and opted in to get promotions. Proximity promotions in store via mobile app can be very efficient and well-accepted by shoppers, especially if they are personalized and relevant based on purchasing history and location near the specific shelf. Unsolicited location-based promotions driven by cellular providers without shopper consent are not a good idea.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
3 years 7 months ago

Store satisfaction is determined based on product assortment, display of those products, convenience and interest shopping and store help.

It concerns me that retailers are too often distracted by a shiny bauble — like offering individualized discounts based on where known shoppers travel in the store. These offer only the tiniest improvement in shopper satisfaction (and take up rate I would expect).

The creepiness factor is a serious problem. I hear a lot of people talking about the latest creepy ads they’ve gotten online or after visiting a store. But more critical for retailers, product assortments have suffered badly while retailers are distracted by shiny baubles like tracking. First and foremost retailers need to focus on product, store shopability and service.

Jennifer McDermott
Guest

I doubt Gen Z or Millennials will feel the creepy factor; location tracking is de rigeur for many of the apps they have willingly installed. However, an opt in function is a no-brainer. For those that are interested, I think it will be a really useful tool for getting up to the minute, location-based deals and offers.

Ryan Mathews
BrainTrust
The “Creepiness Factor,” is — in in Millennial speak, a definite thing. The potential benefits of non-anonymous location tracking are obvious — from a hypothetical retailer’s perspective. But one incident involving a stalker locating a victim, the “leaking” of an individual’s private habits, (say visiting a psychiatrist, a treatment center, a brothel or whatever,) and/or a divorce attorney catching wind of an affair and the party is over. And how, you ask, could those things ever happen? Simple — any and all digital systems can, and probably will, be hacked. And by the way, the “Creepiness Factor” is also associated with Big Data and other technologies and has the same potential for abuse. But it’s a long way from Google knowing you looked at canoes and showing you fishing and vacation sites to you realizing a retailer — or anybody else — is tracking your every physical move, provided your phone is on, which for most people is all of the time. So, to answer the question — if I were a seller I’d be… Read more »
Kenneth Leung
BrainTrust

I think there are two types of location based offers — those designed to spur purchases when the customer is already inside the store area or just outside (within view of signage) or those that are trying to influence customers to stop when they are in transit to stop where they are going to shop. The former makes sense without it being creepy, the latter perceptually is creepy unless it is offered within a customer’s navigation application. Personally however I have never acted on a retail promotion on my Waze driving application.

Peter Charness
BrainTrust

Let’s not forget that our smartphone-carrying children are also walking around as virtual targets for anyone who is so inclined, and it may not be an advertisement that is the objective of their tracking. It doesn’t take a technical genius to tap into the information on their smartphones. If I were getting something truly useful from the retailer in exchange for my data I “might” be a little more open to the idea. Right now I see the risk/reward part of the equation as being significantly out of balance.

Adrian Weidmann
BrainTrust

Access to all of this data and the insights derived from it can drive compelling personalized marketing opportunities. Marketers love the possibilities of extracting more shopper marketing dollars out of their brand partners. While personalization is the end-game, there are plenty of real-world opportunities that need to be addressed in just delivering delight — save the surprise for later.

Kiri Masters
Guest

This technology has the potential to genuinely create a better experience around tasks like grocery shopping. But they key, as mentioned in the article, is clear and constant disclosure.

Just because a consumer enabled geolocation tracking one time in a store in order to find the widget they were looking for, does not give the retailer carte blanche for ongoing tracking and targeting indefinitely.

Limiting the tracking, so it enables consumers to only allow tracking and personalization for a defined period of time (1 hour, 1 day, etc), location, or other behavioral circumstances, could be a solution here. I’m sure we’ll also see the advent of location-blockers for the privacy conscious, just like we’ve seen the proliferation of online ad-blockers over the past decade or so.

Cynthia Holcomb
BrainTrust

The word, tracking, you mean like hunting? As in hunting [location tracking], individual customers? This should be of concern to every retailer. Retailers taking cover under the benefit of a personalized offer? Whose benefit? Tracking a customer, enabled by the fine print of “opt-in” agreement may work in the short term because most people have no idea of the scale and depth their privacy has already been compromised. There will come a tipping point, possibly spurred by an event and then a backlash when customers realize the “creepiness factor” of a retailer tracking them individually.

Ralph Jacobson
Guest

As others have mentioned, I don’t think the shopper of any age demo is ever thinking about any creepiness when they receive a compelling offer on the mobile phone. I think they are ecstatic if the offer applies to them, and that’s a way to drive real brand loyalty which increases brand value ultimately. The technologies available today are finally getting the insights we have craved for decades, It’s time for every retail brand to take advantage, without hesitation!

Craig Sundstrom
Guest

This gives a new meaning to “e-tailing.” I definitely have a strong reaction to the idea, but “enthused” isn’t how I would describe it. Sorry, it’s as Orwellian as you can get, and retailers who advance the idea on the pretense that consumers are craving “one-to-one value offers” will find out they’re mistaken: four-out-of five choosy mothers may choose Jiff, but they won’t choose being followed … at least I hope they won’t.

Mike Osorio
Guest

I’ve had the benefit of watching this technology explode in Asia, particularly within Tencent’s WeChat platform in China. The takeup rate is astonishing and approaching ubiquitousness. The Millennials and Gen Z love it as do their parents. The giveaway of privacy for the ability to be known well by those retailers and others with whom they want to engage has been an easy choice. America is just coming to this world as described by the article and are of course dealing with the potential “creepiness” factor and natural questions. However, the genie is out of the bottle and a combination of opt-in agreements and availability of tracking blockers which will surely be offered, will temper these concerns and allow the development of a digital infrastructure that connects willing consumers to retailers and others who want to connect authentically with their customers and potential customers.

Joanna Rutter
Guest
3 years 7 months ago
Location analytics deployed well can be valuable, but only when retailers have the basic foot traffic data they need to measure any kind of success with other in-store analytics initiatives. It’s notable that RSR identifies that high-performers favor anonymous customer tracking data above their lower-performing counterparts. Too many retailers are already not tracking their foot traffic trends. Investing in more granular customer targeting most often should not be the most urgent item on their innovation checklist! My team at Dor and I chat with fantastic retailers who have the best customer service intentions in mind when exploring location-based personalization systems. When we’re asked about the value of beacons, we’re curious to hear from them what value this highly granular demographic data will deliver for them when they don’t even know how many people are coming into their store in the first place. (Example: It’s great that Susan had her Bluetooth turned on and you know she’s a repeat customer with an average trip worth of $300, but your company spent $3,000 deploying the tech to… Read more »
Joel Goldstein
BrainTrust

We saw a huge backlash over tracking and re-targeting a few years ago with the location coupon fad that came and went. The future will most definitely include augmented reality, however, until that happens, the way to keep tech at the level of the user has and always will be making the privacy settings clear and easy to understand. Facebook has taken a 180 after seeing bad press about this to proactively empower people to protect their accounts.

wpDiscuz
Braintrust
"I doubt Gen Z or Millennials will feel the creepy factor; location tracking is de rigeur for many of the apps they have willingly installed."
"Creepiness will always define that territory where data is perceived as providing benefits that too fully favor the marketer."
"Limiting the tracking, enabling consumers to only allow tracking and personalization for a defined period of time, location, etc, could be a solution."

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