Why Retailers Watch Your Phones and What to Do About It

Last spring, Nordstrom received a great deal of negative attention for one small sign. As signs go, it was simple with black letters, and not even a flourish, fancy fonts or whimsical clip art. But it was the message that the retailer was gathering information about your shopping habits through your smartphone that caused concern among not just online privacy advocates but shoppers who felt unsure about being monitored.
CBS-11 in Dallas reported that 17 of Nordstrom’s stores used a system called Euclid to track customers' movements through the store, how long they stay in a certain area and when they depart. This kind of data helps the store figure out which departments see the most business and if some areas might need to be arranged differently.
To a retailer, this produces excellent market data that previously could only come via survey groups, anecdotes from other stores or infrequent shopper feedback. The Dallas store even called Euclid one of the “ways to improve the customer experience,” ultimately declaring shoppers the big winners.
Unfortunately, many customers felt like losers, especially when hearing that this practice had been going on for months, and that other retailers also use the this sort of system, including Home Depot and Cabela’s.
Now that details are emerging about this type of modern retail research, what’s going to happen? Well, besides Nordstrom abandoning that particular program, the company told Forbes that it was open to finding other opportunities to learn about foot traffic and improve service. Some future trends we might expect include:

• More types of mobile research – Mobile technology has great potential for retailers. Tracking specific areas people visit in a store provides an idea of what's most popular. Mobile tracking can determine popular products or what areas may need more employees stationed or larger counters. Facial recognition software can further add another level of service to a retailer, which may eventually figure out a way to know when specific consumers arrive—and tailor the shopping experience to individuals.
• Stores may make it positive – Part of the backlash against Nordstrom was that there was a small, unobtrusive sign, pretty much saying if you don’t like it, you can visit a site to opt out. Instead, stores can try marketing magic to make the tracking a positive: invite customers to consent to use their data. A store might have a better response by creating a special club of elite customers who like knowing they can have a direct influence in helping a favorite store succeed, with occasional rewards for tasks like number of visits. The app, Retailmenot, is already working toward this, offering coupons to your mobile phone that sometimes show up when you get near one of hundreds of participating stores.
• More ways to block it – Besides opting out, Nordstrom said retailers can help their customers avoid being tracked by encouraging them to turn off their phone or tablet’s Wi-Fi. Don't just power down your phone, but remove its battery before entering a store. Another option is an identity theft protection program like Lifelock.Lifelock actively guards against surveillance and monitoring, and alerts you if your personal data is detected being used for things like credit applications or wireless service.