Retailers’ interest in shopping patterns means most shopping malls are being equipped with mobile tracking devices.
by Jade Le Van
Location-based analytics are growing fast, and many IT companies are offering solutions to map the footfall and habits of customers in shopping malls by tracking their mobile phones. This may happen with shoppers’ approval, when they download a brand’s app or connect to a free Wi-Fi network, or without it, when sensors receive signals from their mobile phones without their knowledge, raising privacy questions.
The question is not “Are you being tracked?” but “Since when?”
In November 2011, a new mobile phone tracking technology to be implemented in two shopping malls in the US for Black Friday made headlines. It was new, unheard of, and the shopping centers, concerned with their image, announced it in the press and placed on-site notifications. Some customers did find it a bit unnerving, but everyone agreed that the media announcement and disclaimers were transparent enough to let people choose whether they wanted to be tracked or not.
Now, let’s fast forward to 2015. In the course of four years, mobile tracking systems have been massively adopted by retailers all over the world, from Europe to Australia. Meanwhile, as the term tracking brings to mind ugly images of stalking and surveillance, this new industry has been dubbed “location-based analytics”.
ShopperTrak, one of the main providers of phone tracking solutions, claims to have deployed over 70,000 of its devices at more than 1,000 world leading retailers and malls across 95 countries. Far from limiting its activities to the United States, the group claims to have offices in China, Mexico, the United Arab Emirates and Finland. In this big data frenzy, ShopperTrak is only one player among a growing list of firms including names such as Path Intelligence, RetailNext, Nomi or Euclid Analytics. The latter even made its tracking technology available for free with a Euclid Express offer, building on the large amount of data collected from free users to improve data insight for paying clients.
Apple was a late-comer in the field. It officially joined the ranks when adopting the Bluetooth Low Energy (BLE) technology, subsequently integrated to its iOS 7 with iBeacon in 2013. BLE will be further explained below, but the simple fact that both Apple and Android phones are compatible with BLE beacons is the surest predictor of the growth of location-based analytics.
How mobile tracking works and why you don’t notice it
The first and most obvious way a store may track its customers is through a dedicated app. Loyalty cards are becoming obsolete and retailers are fully aware that having their app downloaded on a customer’s phone is now the most direct and intimate way to market their products. This type of mobile tracking may look like the least invasive, as it is initiated by the shoppers themselves when they download the app. Yet, it is often combined with browsing history records and location information collected in-store that the app user may not be aware of.
Real-time location in shopping centers is indeed the spearhead of the location-based analytics industry. It can be obtained by picking up a mobile user’s Cellular, Bluetooth or Wi-FI signal, or using their GPS positioning. Signals are captured using receivers positioned throughout a shopping mall or inside a specific section of a store. Clearly, transparency in the use of these sensors does not seem to be a main selling point, as Path Intelligence describes its products the following way:
“They’re designed to blend in with the physical environment, or can easily be placed in maintenance areas away from shopper view. Our Smart Sense Sensors are unique in detecting all three signals that mobile phones emit: Cellular, Wi-Fi and Bluetooth. ”
Depending on the technology used, the scale and accuracy vary greatly, which is why capturing more than one signal is important in retail. Stores which pay for these solutions want a granular level of detail, such as how long a shopper belonging to the 18-25 years-old age group looked at the window display before entering the shop. They also want to be able to influence shoppers’ behaviors by sending time- or location-based information to their mobile phones.
Bluetooth Low Energy (BLE) technology relies on beacons, which are small devices emitting signals at a given frequency within a radius of a few meters. A BLE-compatible mobile phone entering this radius will receive the beacon’s signal and obtain information on the beacon’s position. A beacon could, for instance, be advertising a 50% discount in the jeans department, or send an incentive to try on a shirt by offering a coupon if the customer is later on located in the changing room area.
GPS technology is the second best in terms of accuracy of positioning. It relies on users consenting to a given website or app accessing their GPS data, and is thus more transparent, as long as users show some common sense and grant access to their GPS location only to applications which actually need it.
Wi-Fi signals tracking is a bit trickier. Does it happen only when you connect to a free local Wi-Fi network and agree to its terms and conditions? The answer is no. Even if you are not connected to any of the available Wi-Fi networks and as long as you have not disabled Wi-Fi connectivity, your phone will send out signals while searching for a nearby network. These signals, or “pings”, can be captured and recorded by tracking sensors, such as the ones sold by Euclid Analytics. The associated Euclid platform then allows shopping mall operators or retail owners to track your footpath throughout their premises, and to obtain aggregated data on the flow of shoppers during the day, week or month.
Cellular signal provides a stream of location events to mobile operators, thanks to triangulation with surrounding cell towers. As a result, the accuracy of the information regarding location depends on cell tower density. It is the only location method that works for all handsets, smartphones or not. For long, this data was only available to mobile operators, but several location-based analytics providers are now able to replicate the triangulation of your Cellular signal with their own sensors.
What exactly do they know about you?
The argument used by all vendors of these mobile tracking solutions is that it’s only fair that brick-and-mortar shops may finally gain the same in-depth insight on customers’ behaviors as their online competitors. Who cares about privacy? The physical retailers should have the right to spy on you, because Amazon and the likes have been doing so for the past decade. Actually, you should be grateful, because they are on a mission to enhance your shopping experience.
So don’t worry, Path Intelligence, Euclid Analytics and the likes all put great emphasis on the fact that the data they collect from your mobile phones, such as your unique Wi-Fi address or MAC (Media Access Code), is shuffled and jumbled to be made unidentifiable. In spite of this, they are still able to inform their clients of whether you are a first-time or returning visitor. They may not know your exact identity, but they can monitor your individual shopping behavior and much more if you have volunteered personal information by downloading a brand’s app or signing in to the mall’s Wi-Fi network.
The following video is an illustration of how invasive and impulse-triggering the whole system is meant to be. It shows what happens when a shopper using Shopkick, an app that allows you to get promotions from a wide array of stores, enters a partner shop. The video description mentions that:
“ShopBeacon can welcome a shopper when she enters a store and show her location-specific deals, discounts, recommendations, and rewards, without her having to remember to open the app. It can also tie at-home browsing to in-store benefit—if she “likes” a specific product in the app, shopBeacon can remind her when she enters the store that sells it”.
Yet, most people would probably think that, as long as there is explicit consent from the shopper such as in this video, mobile tracking technologies are nothing to be worried about. Sure, analytics companies will help retailers understand shoppers’ habits better, but it is only an extension of retail marketing, which has been around for decades.
Mobile operators joining the race would be a true game changer. As mobile operators know everything about you, from your name to your date of birth, the number of people living in your house, and obviously, your phone number, they could provide a much more valuable customer profiling to retailers. For them, this would also mean killing two birds with one stone: on the one hand, they receive a monthly payment from you for your phone subscription; on the other hand, they make extra money at no cost by selling your consumer profile to retailers.
This clever idea was the starting point for the UK-based company Weve. Born from a joint venture between EE, O2, and Vodafone, the three largest mobile operators in the country, the company claims a huge consent-based customer base of over 31 million and describes its mission as follows:
“Weve delivers sophisticated brand communications through its mobile messaging and display platforms via broad, targeted, and location-based activity”.
The explicit consent of 33 million British mobile phone users to join this massive mobile tracking marketing program is questionable to say the least, especially after exploring the kind of information Weve proposes to share with businesses. It notably offers brands to message mobile phone owners, in order to reach their audience “in the right place and at the right moment through the device that rarely leaves their sides”. In all likelihood, most users have agreed to such conditions through very small prints in their contract.
Weve insists on its ability to provide not only real-time shopping location, but also habitual locations and home address. If you are often pinpointed at the airport during weekdays, you might be assigned a business traveller profile, while your residence might be used to send you messages regarding a sale at the nearby mall.
The matching of residential, frequent, and real-time locations allows Weve to create very specific segments, as shown below. The concise Weve’s Data Foundation presentation from which this slide is extracted is well worth viewing. Disclaimer: it may contradict your conception of privacy and anonymity.
Weve could be considered a worst case scenario, in which a mobile operator violates its consumers’ privacy through shady contractual consent. Yet, it is neither the first operator or the last to attempt to make money out of its mobile users’ data. In Spain, Telefonica is also trying to address the potential value of its available data with a global business unit created in 2012 and named Dynamic Insight. Its first product, Smart Steps, allows tracking of footfall in shopping malls and provides aggregated socio-demographic information to paying retail clients. It is understandable that mobile operators try to monetize their data, as they are aware that sooner or later location-based analytics players will gather comparable databases.
Are your data protected?
The European Commission’s Article 29 Working Party (Art. 29 WP) position is that geolocation information is personal data. In Europe, it should thus be collected, shared, or stored only with the consent of its owner. In practice, the number of players involved, including the wireless carrier, the operating system provider, the application developer, and third parties that may have an agreement with the aforementioned entities, makes control over who has access to users’ personal information virtually impossible.
In France, the data protection authority known as CNIL requires all personal information collected via mobile tracking to be deleted as soon as the mobile user leaves the store. If a retailer wants to keep shoppers’ data after they leave its premises, it must either formally obtain their consent, which can be done a minima by having them willingly tap their mobile phone to a specific receiver, or make their data anonymous through the use of an algorithm.
Given the low price of mobile tracking solutions, the high expected return on investment from retailers, and the impossibility for any government entity to monitor the use of these technologies, the above regulations bring little hope to advocates of privacy. And as mobile tracking is more often than not sneaky, with no consent window popping up on your screen, your only options if you refuse the real-time tracking of your consumption patterns are to put your phone on flight mode, turn if off, or simply leave it home when you go shopping. And don’t forget to pay cash only!
 EE and Vodafone seem to have exited the joint venture, as the website suggests that Weve is now part of O2. Yet, the consumer base has grown from the 15 million announced initially to over 33 million as advertised now.
 Read more on the Data Protection section of the European Commission’s website