Retail

Stores may be tracking you through your cellphone

July 17, 2013 at 7:57 AM ET

Video: Shoppers’ movements can now be tracked through smartphone data, thanks to retail-monitoring tech companies. NBC’s Stephanie Gosk reports and analyst Hitha Prabhakar discusses the practice.

You know online retailers track your clicks across the Web, recording what you buy and where you browse. But did you know that brick-and-mortar stores are also tracking how you shop?

How long customers linger, what catches their eye and whether or not they return purchased items can be tracked through their smartphones, The New York Times reported this week.

Here’s how it works: When cell phones search for a Wi-Fi signal, they send out information about the smartphone’s owner to those Wi-Fi networks. A software analytics firm snatches that data and analyzes it. The information isn’t personal, and no information or Internet search history is shared.

Jacob Jaber, CEO of Philz Coffee, said he uses Euclid Analytics, one such firm, because it allows him to track foot traffic — not just who comes through the cafe doors.

"It can tell us how many customers are passing by our stores compared to how many customers are actually coming in," Jaber said.

Euclid refuses to reveal client names, but will say that 30 national retailers use its software. Not all retailers are aiming for secrecy, however: The New York Times reported that Nordstrom posted a sign telling shoppers they were being tracked. Q13Fox.com in Seattle reported that the clothing retailer stopped collecting data on customers in May after several complaints.

RetailNext, another retail monitoring company, doesn’t just use Wi-Fi to track customers; it also relies on video cameras with facial recognition software. Tim Callan, chief marketing officer of RetailNext, said monitoring customers is a subtle way to gather information about them — and ultimately improve their shopping experience.

"The industry is paying a lot of attention to what it needs to do to ensure that data can be collected that will help the retailers make the shopping experience better, without stepping on the privacy of individuals," Callan said.

He argues that gathering information helps brick-and-mortar stores stay competitive with online business — which are well-known for their long reach into customers’ shopping histories and patterns.

"Now that the brick-and-mortar stores are getting much more information, they're seeing great gains, and it really is helping level that playing field," Callan said.

But for some customers, like Michael Slade of San Francisco, this raises privacy concerns.

"I don't like the feeling that I'm being tracked at all," he said.

To Slade and others uneasy knowing that an invisible software firm is sucking information out of your smartphone, the solution is simple: Turn off the Wi-Fi function on your phone before heading out.

Isolde Raftery contributed reporting.

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