Will Retailers Make the Right Choice on Mobile Tracking?

Embrace the Opportunity to Be Transparent about the Use of New Technologies

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The holiday shopping season, and post-season sales, are over, but the memories of long lines linger.

Why, customers wonder year after year, does it always take so long? You'd think retailers would anticipate the holiday rush and make the checkout experience and returns process as smooth as possible, maximizing revenue and minimizing shopper frustration.

In reality, it can be quite complex for retailers to figure out where and when crowds and lines will spike. Stores generally rely on employees to anecdotally and subjectively report customer traffic, or track receipts at registers.

New technology, however, has made it easier for retailers to get real-time accurate information. By tracking the Wi-Fi or Bluetooth signals of customers' smartphones, retailers can see patterns in customer traffic in an aggregated manner. This lets them understand whether aisles are being laid out in an efficient way, for instance, and estimate wait times and checkout. Airports have also been using similar technology to better manage changing wait times in security lines.

However, it's no surprise that privacy concerns have already been flagged; tracking customers' cellphones raises the specter of privacy intrusions. Telling shoppers that their phones are being "tracked," without explaining how or why, inevitably provokes a negative reaction in consumers.

That's why the Future of Privacy Forum worked with U.S. Senator Charles Schumer, D-NY, and leading mobile location analytics companies to develop a code of conduct that encourages responsible use of in-store technology to improve the shopping experience while respecting user privacy. This code can be enforced by the Federal Trade Commission, and provides strong requirements:

  1. Ensure consumers are not personally identified unless they expressly consent
  2. Create a central Do Not Track site where consumers can permanently opt-out if they wish
  3. Post conspicuous signage in bricks-and-mortar locations so consumers are aware of the use of location technology

These technologies offer some exciting opportunities to maximize convenience for consumers and to help them get the best prices. They all rely on using mobile data in new ways, and all can raise concerns if not handled properly.

Stores are faced with a choice: They can keep quiet about these new technologies while implementing minimal privacy protections, or they can be up-front and conspicuous about how mobile data is being used and proactively define its tangible benefits to consumers. The former risks alienating consumers, while the latter gives retailers the opportunity to build their brand, trust, and deepen relationships with customers.

Retailers should embrace the opportunity to be transparent about the use of new technologies. If they do so, they will be able to provide shopping experiences that are trusted, stress-free, and enjoyable for everyone. That alone could end up being the best kind of deal in town.

Jules Polonetsky is executive director of the Future of Privacy Forum, an industry-supported privacy group whose supporters include Acxiom, Facebook and Mastercard Worldwide.

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