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August 16, 2013

Retailers Explore WiFi Tracking to Gain an Edge

Alex Woodie

Merchants have tried all kinds of surveillance systems to monitor customers, from wide-angle mirrors to closed-circuit television. While those systems have primarily been used for theft deterrence, retailers are increasingly adopting a new kind of monitoring system that uses the WiFi signals emitted by customers’ smart phones to improve store layout. But in the future, the WiFi systems could be part of larger marketing programs.

The new WiFi tracking systems doesn’t help a retailer know what a customer is doing, but it can tell him where the customer walked in the store (accurate to within about 10 feet), and how long they stood there. Combined with a map of the store layout, this approach can give a retailer insight into customer shopping patterns, and the effectiveness of merchandise placement.

Major retailers such as Nordstrom, Cabela’s, and Family Dollar have reportedly experimented with WiFi tracking systems made by Euclid Analytics, RetailNext, and others. Despite the fact that such systems can only read the MAC address from a smartphone and cannot be used to access the phone’s contents, some shoppers feel the systems violate their privacy. Nordstrom, for example, ended its WiFi tracking program in May in part due to customer complaints, according to a recent New York Times article.

“The idea that you’re being stalked in a store is, I think, a bit creepy,” Robert Plant, a computer information systems professor at the University of Miami School of Business Administration, told The New York Times.

Euclid defends its business practice, and says the reports that it provides to retailers “do not include any representation of individual behavior, nor do we attempt to link any data to individual people.” Customers who don’t want to be tracked in stores that use Euclid’s systems can opt out–by entering their information on Euclid’s website.

MAC addresses don’t identify anything but the type of phone it’s associated with. However, it is a unique identifier, so retailers can already use it to detect repeat customers. It could also be linked to other data to create a more detailed mosaic of the smartphone’s owner, if the shopper opted in to a retailer’s marketing program.

This sets up the possibility for a shopper who has opted in to be offered deals or discounts the moment they step foot into a store. The offers could also be made at the check-out line–and it could even be tailored to be match their mood if the retailer has adopted facial detection software. The British firm Realeyes for example, sells systems that analyze facial cues to determine shoppers’ “happiness levels.”

Similarly, the Russian startup Synqera makes software that uses facial detection technologies to determine a customer’s gender, age, and mood, and then create tailored marketing messages based on that information. “If you are an angry man of 30, and it is Friday evening, it may offer you a bottle of whiskey,” Ekaterina Savchenko, the company’s head of marketing, told the New York Times.

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