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Will Retailers Have To Dial It Back in 2013?

Offline tracking of consumers by retailers is popping up quite a bit in the news this week, which has me wondering what the end game might be.

First, we learned that Sen. Al Franken (D-MN) still isn’t happy with Euclid Analytics—a company that has reportedly recorded the shopping habits of nearly 50 million Americans. Here’s a snippet of his comments:

“People have a fundamental right to privacy, and tracking a consumer's location and movements without permission violates that right…However, Euclid's use of opt-out location tracking – regardless of whether a consumer actually enters a store equipped with this technology – simply doesn't meet the standard of privacy Americans should be able to count on. I’m pleased that privacy is a priority for Euclid, but their continued use of opt-out technology underscores the need for Congressional action to protect consumer location privacy.”

But that’s not all.

ConsumerReports delved into how “many walk-in retailers are taking spying to a new level.” Whether mobile phone tracking, loyalty card programs or even dressing room “booty” cams designed to collect details of consumer shopping habits, this article gives a nice roundup of what’s going on in many stores today—though it’s not clear how widespread specific examples really are.

Not to be outdone, the seemingly innocuous ZIP code question that so many of us are asked when buying jeans at our local stores has been catching the attention of several states—most recently Massachusetts. As Ann Carrns explains,

“Stores want your ZIP code because, combined with your name from your credit card, they can use it to find out other information about you from commercial databases, like your full mailing address. They may even sell the information to data brokers, who sell it to other marketers.”

Steve Smith, in a MediaPost blog, put an interesting twist on the retail surveillance and data collection issue by noting that the creepiness factor of offline surveillance could make online behavioral advertising seem tame:

“Well, the retail segment may actually be doing online advertisers and technology companies an unintentional favor. The amount of surveillance, user tracking and data sharing that is starting to go on in physical retail locations may make consumers forget altogether the relatively tame uses of data by the online advertising ecosystem.”

Could this be true? If so, the real concern might be shifting norms of consumer privacy expectations. What’s next? A good privacy pro could really be an asset to retailers here as they navigate the cost-benefit analysis of this kind of offline tracking. If the data you’re collecting isn’t worth the people you’re turning off, what’s the point? And if I’m a CPO at an online retailer, I’m definitely making sure to point out to the marketing department how creepy the brick and mortar competition is.

It will be interesting to see how the offline behavioral tracking issue unfolds in the coming year. Could we see the FTC get involved? Good CPOs will be those who make sure to keep their firms from being made an example of if the FTC happens to turn their eyes to what’s going on in local retail aisles.

photo credit: freshwater2006 via photopin cc

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