Nordstrom Experiment Highlights Privacy Issue

By Sam Lewis

In an effort to emulate the data gained in the realm of online shopping, and improve the in-store shopping experience, brick-and-mortar retailers are testing new technologies to learn about their customers.

Last autumn, Nordstrom implemented in-store technology that followed Wi-Fi signals of smartphones and other mobile devices to track customers’ movements throughout the store. This Wi-Fi tracking, combined with the use of video surveillance, allowed Nordstrom to learn information about its customers like sex, age, how many minutes were spent in a particular aisle or department before deciding to buy merchandise, how frequently each shopper visits the store, and various bits of other demographic information. In the online realm of shopping, this demographic information about the shopper is collected automatically in a web browser’s cookies. Brick-and-mortar store shoppers generally aren’t expecting to have this important, and sometimes security-sensitive information, taken from them through their mobile devices and the apps downloaded on them. Oftentimes, consumers aren’t even aware of the personal information required to download and use many mobile apps.

Needless to say, when Nordstrom customers learned about this experiment they were outraged. Most of them felt the testing of this technology without permission was a violation of their privacy. Subsequently, Nordstrom ended this in-store research in May.

The data collected allowed Nordstrom to see how shoppers navigated the store. This information can be used to plot store layouts as well as aid in the presentation of merchandise based on gender, age, and customer preferences for particular types of products. This knowledge can allow retailers to send each shopper personal recommendations and merchandise-specific coupons through their mobile device. In doing so, the retailer is not only encouraging the customer to spend more, but also enhancing the shopping experience – a common industry-wide goal.

As the Nordstrom experiment has shown, brick-and-mortar retailers need to tread carefully in an increasingly digital age of shopping. There is a fine line that continues to blur between customer convenience and the privacy of the customer. Perhaps a better approach that could respect the consumer’s privacy and give them a great shopping experience would be to give the shopper the ability to manage their preferences about how their data is obtained and used.