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Consumer Privacy Thwarts The Short-Lived Rise Of Mobile Location Analytics

ajithEVPRetailers excited about using Mobile Location Analytics (MLA) to transform their businesses may want to rethink their strategies. Their excitement is understandable: MLA promised to bring to their physical stores the same customer behavioral insights and new selling opportunities that they enjoy online with web analytics.

But MLA collided with consumer privacy rights, both at a legal and grassroots level. As a result, retailers are looking at other consumer-friendly technologies to supplement what MLA has offered.

In a nutshell, MLA uses customers’ smartphones with in-store WiFi and Bluetooth beacons to identify, track and monitor them — using the MAC address that their mobile device broadcasts — as they shop and move about. The value proposition to retailers is that the data could help them improve product placement, floor plan layout, staffing levels and targeted marketing, to name a few benefits.

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Retail analytics vendors argue that customers not comfortable having their data collected surreptitiously should relax; the data they collect is anonymous. And besides, they can easily opt out if they want…in theory. But few consumers are even aware they are being tracked. And if they are, they’d have to figure out how to find their MAC address and then register it in an opt-out web site.

The Federal Trade Commission has also weighed in on the issue. In 2015 it sued and settled with retail tracking company Nomi Technologies, alleging that its privacy disclosure was misleading and no in-store opt-out tool was available, as retailers were not obligated to post notice of its use. Vendors like Apple also took heed of rising consumer complaints and incorporated new tracking-thwarting technology into iOS devices by randomizing the transmitted MAC addresses of the mobile devices.

But not all is lost for retailers seeking this detailed level of customer shopping patterns. Retailers can combine existing technologies, such as WiFi analytics for customers who opt in to guest WiFi usage, with new technologies like Anonymous Video Analytics (AVA), to better understand and serve their customers.

Customers are generally more than happy to utilize a store’s guest WiFi to enhance the shopping experience, such as reading product reviews, comparing prices in other stores, or looking for online coupons. A survey by mobile advertising tech vendor JiWire found that 80% of consumers say availability of guest WiFi influences where they shop. So sufficient volumes of consumers are available for accurate analysis. And by utilizing guest WiFi, the customer opts in to the store’s data gathering policy by default.

AVA uses facial recognition technology to detect general traits on peoples’ faces using camera sensors located around the store. It can determine gender, age and emotional expression of customers. AVA technology is unable to identify anyone individually.

Integrating AVA with WiFi analytics can give retailers great insights into how displays and product placements are working, how well the store is laid out, which products are hot, and how effective their digital signage is, among a host of other benefits.

And the good news is that it does not impinge on consumers’ privacy rights because they can gladly opt in to WiFi usage, while AVA data is completely anonymous. Retailers can opt for a cloud-based AVA service delivering cloud-based economics and functionality. The big key infrastructure requirement is ensuring fast and reliable WAN connectivity for each store so that they can fully leverage the AVA services in the cloud.


 

Ajith Edakandi is Director of Product and Service Development for Hughes Enterprise Solutions and is responsible for enterprise deployments of wireline and satellite based systems. Additionally, he is a Product Manager for WiFi solutions and heads security service development efforts for Hughes.

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