Retailer Takes Customer Tracking to New Level for the Holidays

As we have discussed here before, more retailers are adding technology to track customers’ traffic and purchases in stores, from iBeacons to infrared sensors. The practice is becoming so common, in fact, that the Future of Privacy Forum estimates that around 1,000 small and large retailers are using some type of sensors to monitor the pathways their customers take throughout the store. Macy’s (NYSE:M) is the largest and most recent example of a retailer effectively using customer tracking in an attempt to increase customers’ purchases this holiday season. In November, Macy’s installed Apple’s (NASDQ: AAPL) iBeacon technology in certain stores in New York and San Francisco, in partnership with rewards app Shopkick. Shopkick’s shopBeacons enable shoppers with iPhones and some Android phones to have their Shopkick app “woken” up by a signal from Bluetooth transmitters when they enter Macy’s, even if their phones are in sleep mode, according to The Wall Street Journal. As a customer who has opted in walks through a Macy’s store, they might see special offers based on the products they are near, Cyriac Roeding, Shopkick’s CEO, told the newspaper. Now, it seems that jeweler Alex & Ani has upped the ante on effectively utilizing tracking software to understand shopping patterns and boost sales for the season. The retailer is utilizing software from Prism Skylabs to track shoppers’ movements in real time. Prism combines video from security cameras with software to build flow charts of people's movements and uses heat maps to show which products get picked up more frequently than others, according to The Wall Street Journal. We are impressed that Alex & Ani is committed to using this intelligent, sophisticated software that will allow it to grow customer sales now and in the future. Already, Alex & Ani is using the data gained from customer tracking to improve its merchandise selection and allotment. On Black Friday, Alex & Ani used the location data to make decisions in real-time—swapping candles, charm bangles and perfumes from low-traffic areas to high-traffic ones, The Wall Street Journal reported. The jewelry retailer effectively reduced bottlenecks by moving popular items to less busy parts of the store. Plus, staff helped customers shop online when wait times got too long. "You're looking for that insight that makes you just a little smarter than your competitors," Ryan Bonifacino, Alex & Ani's vice president for digital strategy,” told The Wall Street Journal. The holiday season is the ideal time to test the customer tracking technology because of the high volume of shoppers, he added. Then, after the craziness of the holiday season, the retailer can sort out the details of its findings. Smartly, Forest City Enterprises, which operates around 20 malls, also used customer tracking based on a heat map and foot traffic patterns, to improve Black Friday sales. After last year’s tracking data found that shoppers who had arrived as early as midnight started leaving the malls around 6 a.m., likely to grab food, Forest City suggested its mall restaurants open before 6 a.m. And Nordstrom’s (NYSE: JWN) customer tracking test last spring was successful – in some respects. The retailer used Wi-Fi signals from smartphones to track customer movement in 17 stores. Unfortunately, in this case, Nordstrom shoppers who were worried about their privacy, issued complaints to the retailer and on social media sites. To combat consumers’ privacy, concerns, the Future of Privacy Forum suggests that retailers using tracking technology notify shoppers through signs or other means. Eight companies that make tracking gear agreed in October to ask their retail clients to post disclosures, but the idea went nowhere with retailers, according to The Wall Street Journal. Consumers’ privacy concerns have prompted some retailers to hold off on tracking technology. "People just don't want to feel like they're being followed around the store," Robert Cohen, retail vice president for Patagonia, told The Wall Street Journal. We think the idea of not utilizing some of the new customer tracking tools out there is short-sighted. In the current highly competitive retail environment – particularly during the short holiday shopping season – retailers need to utilize all the tech tools they can.