March 27, 2014, 4:51 PM

Consumers just say no to in-store mobile tracking

77% of U.S. adults with smartphones do not want retailers tracking their smartphones when they are in retailers' stores, OpinionLab finds. 43% of consumers are less likely to shop at a store that tracks mobile devices. But what if a retailer offers a gift in exchange for tracking?

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Bricks-and-mortar retailers and mobile technology vendors have been busy dreaming up all kinds of ways to track consumers' smartphones in stores so they can send consumers special deals or coupons when the consumers are literally within reach of specific products or aisles or departments. And beacon technology is gaining a lot of attention after Apple Inc. last year debuted iBeacon, which enables stores to use hardware beacon transmitters to track iPhones via a low-energy form of Bluetooth wireless networking technology, no Internet required.

But before retailers go too crazy with in-store mobile tracking, they might want to ask their customers if they want to be tracked. According to customer feedback technology provider OpinionLab, 77% of U.S. adults with smartphones do not want to be tracked by retailers when in stores. Think mobile-mad millennials are different, more open to new mobile methods? They aren't. The same percentage of millennials (those born between 1980 and 2000) do not want to be tracked, the March 2014 survey of 1,042 U.S. adult consumers says.

Further, 44% of U.S. adults say they would be less likely to shop at a retailer that tracks customers' mobile devices, the survey says.

How come consumers don't want to be tracked? 69% say they do not trust retailers to keep their data private and secure, 67% say it feels like spying, and 61% say retailers will only use tracking data to benefit the company and not the customer, the survey finds.

Consumers turned to their pocketbooks when asked what incentives would encourage them to participate in a tracking program. Across the board, consumers expect to be directly compensated for their participation, either by receiving price discounts (61%) or by getting free products (53%), the survey says. Next on the list? Nothing. 35% of consumers say nothing would motivate them to participate.

“Consumer sentiment shows that retailers need to tread lightly when it comes to tracking shoppers on their mobile devices,” says Jonathan Levitt, chief marketing officer at OpinionLab. “There is a ton of suspicion around in-store tracking, but if it has to happen, opt-in with explicit consent is the strongly preferred way. Retailers also have to acknowledge the ongoing fallout from recent data breaches, and really up the game on privacy and security. The good news is that there is an opportunity for brands who are transparent about collecting data, use an opt-in approach and close the loop by showing consumers that these programs translate into something they value.”

There are two distinctly different ways that retailers are approaching in-store tracking today. The first involves placing sensors or beacons throughout stores. Consumers opt in after downloading a mobile app that interacts with the sensors. In this scenario, the retailer has asked permission and the consumer has given consent. 

The more controversial approach involves placing sensors around the store that pick up probes emitted from Wi-Fi enabled smartphones. This includes the media access control (MAC) that is unique to each phone and can be used to track the device around a store. 

"This means that any consumer who walks into a store, or even walks by a store, with her smartphone turned on can be automatically tracked," Levitt says. "While the retailer is not collecting any personally identifiable information, data is often collected without the consumer's knowledge."

Levitt says a major department store chain and a high-profile home improvement retailer we're collecting data in this manner until customers found out. Both merchants ceased that style of tracking.

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