Luxury Retail: Big Data is Watching

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The gap between the physical & digital retail experience continues to narrow, as retailers look to mobile tracking & facial recognition software to better understand brick-and-mortar consumers.

The average Briton now has 26 online accounts, covering everything from banking to utility bills to social networks to registration with online retailers. 25 to 34-year-olds sign up to an average of 40 accounts. That is a lot of data for marketers, and rich data that in most cases, is not available to retailers selling their goods in a physical store.

In the information age, consumers are subscribing in droves to websites that require information regarding age, sex, geographical location and even credit card details. I.P. addresses provide online retailers and search engines with rich data as to what is being searched, how long they spend on site and what behaviours they exhibit when searching or shopping.

Then of course there are social tools. Pinterest literally tells marketers what trends and specific products are resonating well with consumers. Facebook collects not only the demographics of consumers, but their likes, psychographics and details regarding their peer group. Twitter doesn’t necessarily tell you what is happening in the world, but it will tell marketers the Top 10 most important things happening at any given time within its community.

It has become accepted that personal data is the price we pay online for the ability to quickly compare pricing, arrange convenient delivery and benefit from limited-time discounts. We inscribe our email addresses and social profiles to receive direct alerts, personalised offers and customised content.

Yet when retailers try and collect similar data from consumers in a physical retail environment, they become ‘unnerved’. “We did hear some complaints,” explained Tara Darrow, a spokeswoman for Nordstrom, to the New York Times.

In a bid to better understand its customers – how many came through the doors, how many were repeat visitors – the department store tested new technology last fall that allowed it to track customers’ movements by following the Wi-Fi signals from their smartphones. The retailer ended the experiment in May in part because of consumer protests.

Nordstrom’s experiment used video surveillance and signals from their cellphones and apps to learn information as varied as their sex, how many minutes they spend in various parts of the store and how long they look at merchandise before buying it.
According to the NYTimes, all kinds of retailers are testing these technologies and using them to decide on matters like changing store layouts and offering customised coupons. Technology by RetailNext uses Wi-Fi networks to pinpoint where the shopper is in the store and recognise returning shoppers, divulging how repeat customers behave and the average time between visits.

One consumer described the process as “creepy”, another decreed that it was “way over the line,” despite the fact that the in-store counts were made anonymous. A key criticism of in-store data collection is lack of consent, with the NYTimes article noting that consumers can rarely control or have access to this data. Online, it is still the consumer – to an extent – who volunteers their information.

Similar irk has arisen with the news that facial recognition software – similar to that used to help identify criminals and terrorists – is now available in retail settings.

Designed by NEC IT Solutions, the ID technology analyses footage of people’s faces as they enter a store, taking measurements that generate a numerical code or “face template” which can be checked against a database (BrandChannel).
For luxury brands, this could mean instant identification of a VIP client on a global basis. NEC’s technology means that if someone notable enters the store, staff can receive an alert via computer, iPad or smartphone, with details such as dress size, favourite purchases and shopping history.

When you consider the nomadic lifestyles of the ultra-affluent consumer, this could prove to be an invaluable tool for luxury brands, and their ability to ensure consistency of service across the world. When consumers increasingly are looking for personalised service and enthralling in-store experiences, these types of tools seem to be logical stepping-stones in delivering desired outcomes.

Arguably part of the success of the Net-A-Porter group has been its ability to adapt its platform, services and marketing to consumer preferences and expectations, based on recording consumer behaviour and data on each of its sites.
When you consider the ease by which a Net-A-Porter customer can receive personalised stock notifications based on geographical location (and therefore season), designer preferences and garment size, as compared to a consumer walking into a department store, it is easy to see why online channels continue to grow. And why physical retailers are looking to technology to enable them to compete.

The privacy implications must be addressed and regulated, just as they must be in the digital space. But perhaps consumers need to think more holistically about the data they already surrender online without a second thought, before accusing brick-and-mortar retailers of intruding surveillance. Ultimately, it is difficult for brands to be able to deliver what a customer wants, without having some semblance of what that is.

Sophie Doran

Every day, thousands of leading luxury professionals from over 150 countries log on to Luxury Society, a private online business network designed to connect, inform and inspire. Members are able to forge valuable relationships, keep abreast of the industry's latest developments and discover innovative strategies and career opportunities, while maintaining the privacy and discretion that they dema...(Read More)

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