Privacy Engineering

Brick-and-Mortar Transparency: Are Phone Alerts the Best Notification for Collecting Consumer Data?

Note from the Editor:

This is the fourth in a series of posts by Westerman exploring the role of trust in the marketplace. Here are the first, second and third. Future posts will discuss research that shows what things people do value when they’re shopping, and how technology can support those things. Additionally, the IAPP will host the web conference Bricks-and-Mortar Is Back—Emerging Privacy Issues in Retail Settings in the U.S. on Thursday, October 31.

New technology allows retailers to collect data—such as location, contacts, apps installed—from their customers’ phones. But when we surveyed consumers, only 33 percent of them realized this might be happening.

On the other hand, when we surveyed consumers about stores collecting only their location, this number increased to 50 percent.

We know from previous research that when people are not aware of data being collected and don’t expect it to happen—and then find out about it later—trust can be eroded. How, then, can businesses create transparency around data collection?

The first solution we considered was posting in-store notices, but our research showed a very low awareness and retention of signage on the part of shoppers. We asked consumers to purchase a specific item in a store, and then after the purchase tested their recall of in-store messaging. On average, consumers recalled less than 10 percent of in-store signs. Even more telling, none of the shoppers we interviewed in Santa Clara County, CA, recalled seeing the consumer protection notice posted at the checkout lanes of every store they visited.

The next natural place to look when considering how to communicate with customers might be the phones themselves. After all, you’re only gathering data from people carrying their phones, so you know your message of transparency will reach the right audience. All they have to do is look at their screens. And according to a May 2013 Google study, 84 percent of smartphone shoppers use their phones to assist with shopping while they’re in a store.

Sounds promising, right?

But the Google numbers referred to shoppers who used their smartphones in-store just once a month or more. We wanted to more deeply understand the context in which shoppers used their phones while shopping, and so our researchers conducted a series of studies aimed at observing this technology and its usage.

We observed more than 2,500 shoppers at 12 different stores—ranging from stand-alone discount chains like Walmart and Costco to upscale mall retailers like Bloomingdale’s and Neiman Marcus—in different parts of the country, at different times of day, and on different days of the week.

Of the shoppers we observed, only 11 percent had their phones visible.

So, while the number of people who ever use their phones while shopping may be high, the frequency of use is actually quite low.

Our researchers also looked at phone use among people who were at malls but weren’t actively shopping—people walking between stores, sitting in common areas, or dining at restaurants. Among these people, just over 30 percent had their phones out and visible.

In other words, people at malls were nearly three times more likely to use their phones while they weren’t shopping than when they were inside a store.

The reasons for this are common sense: When customers are inside a store, they’re focused on the products. Not only are they less likely to talk on the phone—they’re less likely to talk to a present companion, because they’re busy looking at merchandise.

Also, shoppers’ hands are occupied. They’re pushing carts, reaching for wallets, tending to children, and testing out products. Of the shoppers our researchers observed, almost 40 percent had both hands occupied at any given moment, and 70 percent had at least one hand occupied. By contrast, only 20 percent of non-shoppers had both hands occupied.

Currently, phones are difficult to access and simply don’t add a lot of value to the shopping experience. We do think technology has a place in helping retailers provide transparency for customers, but any successful solution will have to work within the constraints of the shopping experience.

In fact, successful solutions will have to support and enhance the shopping experience. If you can find out what customers value, and then integrate technology in a way that makes for a better and richer in-store experience, you’ll reach your customers.

In our next post, we’ll discuss our research that shows what things people do value when they’re shopping, and how technology can support those things. 

About the Author

Ilana Westerman is CEO of Create with Context, Inc., a leading digital strategy consulting firm. For the past 15 years, she has championed the role of people plus context as key drivers behind the design of innovative technology solutions, helping ensure that digital products and services align with human needs, goals and desires.

Westerman began working on digital innovation in the mid-1990s, including award-winning work on the IBM Nagano Olympics web presence. Then, as one of the early members of Yahoo!, she helped build the Yahoo! User Experience team, leading R&D teams for key Yahoo! properties. She now serves as CEO at Create with Context which, under her leadership, has seen significant growth since its inception in 2005.

See all posts by Ilana Westerman

Gabriela is a design researcher at Create with Context. Her interest lies on understanding consumers’ mindset, their behaviors, needs and desires, to develop services and product concepts that enhance user experience and create new business models. She is an MBA in Design Strategy candidate at California College of the Arts in San Francisco, which is recognized as one of the leading innovation degrees in the world.

See all posts by Gabriela Aschenberger

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