Should Retailers Target Mobile Devices?

Retailers continue to amass reams of data about where consumers go, what they look at, how long they spend looking at particular items, and what they purchase. Consumers have come to expect it on the Internet, but retailers are collecting that same data in their stores using shoppers' own cell phone Wi-Fi signals to track their movements through the aisles.

According to Sen. Charles Schumer (D-N.Y.), consumers aren't freaked out about this because they often don't even know it's happening. This is why, in late July, he called on the U.S. Federal Trade Commission to require retailers to notify consumers that they could be tracked via their cell phones and to give shoppers a clear and obvious opportunity to opt out.

United Colors of Benetton, Family Dollar, Bloomingdales, Tootsies, Swatch, Cabela's, Mothercare, Warby Parker, and American Apparel are among the many prominent retailers currently collecting consumer data in this way. One of the top vendors of the technology, Euclid Analytics, measures more than 21 million shopping sessions a month across the United States in more than 400 specialty, big-box, and department store outlets and shopping malls.

In a letter to the FTC, Schumer called the practice "intrusive and unsettling."

"If stores are going to track you footstep by footstep, you should be alerted in no uncertain terms and be given the opportunity to decline," Schumer suggested. Cell phones, he added, are personal, and therefore "shouldn't be used as some James Bond-like tracking device without the shopper's knowledge."

Schumer charged that the only way consumers can currently prevent this sort of tracking is by leaving their cell phones at home or turning them off while they are at the mall.

Equally unsettling, according to the senator, is that retailers take that data and use it to create very detailed profiles of each individual shopper, and consumers have no say in how that data is used, to whom it is sold, where it is stored, or how it is secured.

Both statements are simply not true, according to Euclid. The firm claims that it only reports on "anonymous foot traffic" and never collects or uses personally identifiable information. The data, it says further, is used to help retailers improve store layouts, schedule promotions and sales, measure marketing effectiveness, determine staffing needs and store hours, and even prevent shoplifting.

Consumers, the company says, can opt out at any time by visiting Euclid's Web site and filling out a simple form. The firm says it also provides opt-out instructions at every store that uses its service.

Still, the public response to such data collection is a real concern. Nordstrom, a Euclid customer that was piloting the cell phone tracking technology at two of its stores in the Seattle area, in May opted to suspend the initiative due in large part to customer complaints it received after the practice was made public. In 2011, two shopping centers in New York reportedly suspended this kind of tracking after Schumer raised similar privacy concerns.

Yet, despite the growing clamor for consumer privacy, a new study from YP, a local search, media, and advertising company, found that nine out of 10 consumers almost always have their mobile devices with them, and 61 percent permit mobile apps to access their locations at least some of the time.

Consumer privacy on the Web is back in the news as well, as a World Wide Web Consortium (W3C) working group gets set to release a standard for how Web sites should respond to "do not track" requests from consumers. The W3C's Tracking Protection Working Group, composed of 109 members from companies such as Microsoft, Google, Yahoo!, Apple, Intel, AT&T, Facebook, Adobe, Mozilla, Comcast, Nokia, and the BBC, rejected suggestions from advertisers as to how the standard should be written. The Digital Advertising Alliance (DAA), with the backing of several other advertising organizations, had submitted a proposal that would have allowed advertisers to continue profiling Web site visitors who asked not to be tracked. It would also have allowed them to send Web site visitors targeted ads based on their online behavior. At the same time, it would have prevented advertisers from identifying the specific sites that consumers visited, instead categorizing their Web behavior in more general terms, such as "interested in buying a car."

The W3C committee, which has been at work on a standard since September 2011, released a statement in which it said the DAA proposal would have led to "widespread confusion if consumers select a do-not-track option only to have targeting and collection continue unchanged."

The DAA, together with the Association of American Advertising Agencies, the Association of National Advertisers, the American Advertising Federation, the Direct Marketing Association, the Interactive Advertising Bureau, and the Network Advertising Initiative, fired back in a statement of their own sharply criticizing the W3C committee's decision, saying it did not reflect the real choices of consumers.

In the statement, the advertising organizations cited a recent Zogby poll that found that at least 68 percent of consumers prefer to get some Internet ads directed to their interests.

The DAA proposal, the organizations further said, "provides real choice to consumers while at the same time protecting the economic engine of the Internet."

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