Privacy remains a hotly debated topic.  For example, the secrets revealed about the US government’s NSA activities have created a firestorm for some, and a shrug from others, as in “Why are you surprised?”  While I posted this elsewhere, I’m really curious to get a view from “abroad” – or anyplace else in the world you might be.   Please let me know what you think!

At my company we have long talked about the tradeoffs of privacy for relevancy.  It is our position that consumers are willing to trade some amount of the former in exchange for the latter.  But it’s also our view that it’s a delicate line, and that line can be too easily crossed. Last week, Julie Bernard, Macy’s VP-customer strategy, took on the topic at the D2 Digital Dialogue conference in Cincinnati.

Ms. Bernard both defended the use of customer data to provide relevancy to shoppers and also described some of the things the company would not do because it felt they were over that line.  Ironically, that same week, my partner, Nikki Baird, posted a blog on a very similar subject, called “Privacy and Stores: The Coming Storm.” Both Ms. Bernard and Baird came to the same conclusion: there are some things we can do with technology that we just shouldn’t do.

Given that my company gets most of its revenue from technology vendors, I might be shooting myself in the foot here, but sometimes it’s better to call it as you see it than to nod your head in blind agreement.  So here goes.

One of retailers’ Holy Grails is to gain better insight into the paths consumers take through their stores. They might want to know any one of several different things, including: “Are they standing for a while in front of the lovely end cap we spent time and money building for them and do they actually buy what we put there?”  “What’s the most typical path through the store?” “Are the lines at our cash registers too long?” Or even, “Why is this department doing so poorly in this particular store?  It’s blowing the doors off in other stores and channels.”  And finally, “We’re getting killed on Prilosec shrink.  How are people stealing it?”

Today’s technologies can answer those questions and more. While there are a fair number of different technologies to enable answering them, some are more innocuous than others. Video analytics can do it in a relatively anonymous way, and most retailers have cameras installed already.  The coolest one we saw was a technology that bounces a signal from in-store LED lights (the ones that are actually lighting the store) off the camera on your mobile phone.  It’s still anonymous, and is very accurate location-wise.  But Ms. Bernard gave some us an insight into one that just feels its veered too far to the edge of the “Creepy Continuum.”  In her words[1],

“We could today if we wanted to — we are not — I could just track every phone that came into Macy’s M -1.4% without announcing to people,” Ms. Bernard said. “If that phone stood in front of my register for more than 20 seconds, I could associate that [ID] with those transactions.” That would in turn allow Macy’s to find those shoppers’ home addresses and deliver tailored in-store and online offers too.

“Just because you can doesn’t mean you should,” she said. Macy’s doesn’t want to “get ahead of consumer readiness” in a way that could lead to “brand erosion,” she said.”

The technology she’s describing, which we’ve seen from several different tech vendors over the past year, works as follows:

Every single device that connects to any network has a unique physical identifier, a bit like a license plate.  It is called a “MAC Address.”  Not Mac as in Macintosh computer, but MAC as in Media Access Control. And it is unique to that device. So if you’re carrying a tablet and a smartphone, you’re carrying devices with two different MAC addresses.  As you’re wandering around through your day, if you’re not already connected to a wifi network, your network card(s) is looking for a place to connect.  It broadcasts a signal that basically says “Hi this is MAC address so-and-so.  Is anybody out there?”

What this technology does is grab that signal and that MAC address and start to track it around the store, whether you’re actually connected to wifi or not. And as Ms. Bernard points out, there’s no reason the retailer has to tell you.

My partners and I don’t love this technology for a variety of reasons.  First and foremost, it’s way over the “creepy” line.  We might feel better about it if the tech vendor requested and/or insured that signage informed the shopper that this data gathering was going on.  Even though all vendors say they mask the data today, so that it’s not usable after the fact, who can guarantee that will be true tomorrow?  At least one vendor we spoke with does require the retailer disclose what it’s using and we were good with that.

But that brings us to the other tricky question:  How accurate is the information anyway?  I would argue that it is more error-prone than video analytics.  After all, many of us carry multiple wifi enabled devices.  So we could easily be double-counted.  Plus, if our children have phones and they’re shopping with us, should they be counted separately?  Not if they are 10 years old, they shouldn’t.  Finally, some people turn off wifi when they’re out and about as a matter of course.  I do. It preserves battery life. And if I hadn’t already, and I found out a retailer was tracking me this way and hadn’t told me about it, I’d turn it off in a heartbeat.  Then, poof! I’ve suddenly gone invisible.

Now it’s true that even if the data isn’t exact, it’s likely directionally accurate.  But I’ve found that retailers will challenge any number that looks “not quite right” and it’s a conversation I’ve hated having throughout my career.  So it’s risky.

That’s the danger of the creepy continuum.  It’s creepy and inaccurate all at the same time.  And the brand damage if you “get caught” will be painful and swift.  And potentially not fixable.

Bottom line for me is a round of applause for Macy’s.  This company has crossed the chasm from traditional department store to “cool place to shop” for the millennial generation. Whether or not its advantage is sustainable is still to be determined, but at least we can say it’s not shooting itself in the foot looking at the wrong data.


[1] Source:  Adage.com: http://adage.com/article/datadriven-marketing/macy-s-marketers-speak-data-benefits/244107/

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  1. Mohamed Amer

    Provocative and timely topic Paula!  The notion of a continuum to this privacy-relevancy debate needs to remain in the retail conversation on using technology to deliver value to shoppers.  Technology enables us to do many things (as a retailer or a shopper) that make our lives easier and simpler yet I am curious as to how well this plays out in different geographies.  I suspect the creepy end of the continuum has different starting points – not just geographically, but by demographics as well.

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