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Of course, not all consumers are happy to know that their shopping habits and the identification number (MAC address) are tracked. Nordstrom, the Seattle-based retailer, received a flurry of criticism after their pilot tracking project was publicized in the media.
While this particular project is over, the use of WiFi tracking and smartphone data for marketing purposes is not likely going to disappear. From a retailer’s perspective, it offers pure gold – data about individual customer’s preferences such as where they shop, length of their store visits, how they walk around the store, and the final purchase amount.
The WiFi Function In Your Phone Reveals Your Shopping Preferences
Regardless of whether your phone is running on an Apple, Android, or Windows operating system – when the WiFi function is on, your phone is almost constantly searching out for nearby WiFi networks to hook up with. It does so by sending out a little “ping” message that includes the device ID number.
By recording and analyzing the pings from potential customers’ smartphones, retailers can learn quite a lot about their customers’ preferences. Euclidian Analytics, the company that enabled the Nordstrom tracking project, says on its webpage that their app enables clients to chart customer movements in a store, determine the ratio of potential to actual customers, and link these information to the purchase amounts.
Your MAC address is You
As mentioned, the WiFi “ping” includes the individual ID number of the phone. Technically, this is called the MAC address, short for Media Access Control, and is burned into the device by the manufacturer. A more descriptive term used by Windows PCs is “physical address”. Yes, your MAC address – together with your IP address – is your de facto electronic ID number.
By recording the MAC addresses of customers, marketing people can get a very close look at the individual consumer over time. This is much more than simply tracking physical movement to fine-tune the store’s floor plan. It also includes an individual’s financial transactions over time and his or her choice of store locations. Tracking of this type is more invasive – in my opinion – than mining text messages for fashion references (plaid versus paisley versus polka dot). And, this last sort of analysis is clearly illegal – even though it might be interesting for a retailer.
Let’s talk about privacy
Of course, tracking companies talk a lot about protection of individual’s personal data, encryption and secure storage. MAC addresses, for example, are stored in an encrypted “hashed” form. And if you don’t want to ever be included in this, you can add your MAC address to their “Do not track” database.
But what happens when it is not just Nordstrom that is participating in this tracking scheme, but an entire shopping mall? The food court would have very precise information about the menu preferences and repeat customers of its stores. And this is where privacy goes down the drain.
Advertising gurus have pointed out that tracking a MAC and IP address is exactly what companies such as Google and various E-shops already do. This enables them to follow potential customers throughout the search and shopping experience. The unanswered question is if a physical shopper should be given more privacy than the online one. Hmmm. That is something to think about while shopping.
Your participation is almost automatic
If you have a smartphone, your participation in such tracking schemes is virtually automatic. As Nordstrom’s advised customers in the 17 pilot stores, “To not participate, turn off your device’s Wi-Fi function or power off your device.”
Lyle Frink on Google+