"This must have implications for dealers." - Excerpts from Chapter 3 of "Age of Context"

"Age of Context: Mobile, Sensors, Data and the Future of Privacy" 

by Robert Scoble and Shel Israel

Chapter 3 - The Customer in Context

Shopperception installs panels containing PrimeSense 3D sensors on the ceiling directly over a retail product section. The sensors see what every shopper touches or reads, where they stop to look, what actually goes into the shopping cart and how long each customer spends conducting any one of these actions.

The sensors mask the identity of each user. The cameras can recognize the gender of the shopper, but they don’t capture their identity Ariel Di Stefano, Shopperception co-founder, insists, “Our policy is to respect personal privacy, always.”

The idea, according to Di Stefano, is to modernize the primitive way data has been captured for more than a century. Traditionally, a clerk has collected most of it with a clicker and a clipboard.

Shopperception lets retailers understand a lot more. While they may not be video recording what any one person is doing, the sensors provide granular data on what people collectively do, giving the store a deep and wide understanding not previously attainable. Where do most people standing in front of cereal brands look? Where do they reach? What catches their attention? How often do they buy the first item they touch? What sort of incentive will get a customer to switch?

In the old days of the local store, a shopkeeper could observe his best customers and adjust stock and displays accordingly. But for big brands that sell myriad products on millions of square feet of retail displays in scores of countries, it is a daunting task to understand what happens at the point where shoppers touch inventory.

The data being collected is expected to help stores understand customer behavior so they can better predict the likely effect of changes. It lets retailers fully understand the value of every inch of store real estate and how position and location impact customer behavior.

Shopperception enables the world’s largest retailer to do precisely that with enhanced loyalty programs that use contextual technology to know when one of its best customers is there. Based on previous buying patterns and the route the shopper usually takes through the store, the customer will get special offers on items he usually buys, or Wal-Mart thinks he might want.

For example, when a shopper touches a box—or merely looks at it—an iPad screen installed on the shelf displays a promotional offer for the box being touched, or perhaps for a competing product. To get the deal, all the customer has to do is toss the offered product into his shopping cart and the cash register, which is part of the system, will adjust the price at checkout.

We think the loyalty program will take on new dimensions in the Age of Context. Additionally, such incentive programs can deal with the responsibility of meeting shopper privacy wishes. People will understand that when they opt in, they are trading their personal data for better deals and perhaps shorter lines.

Some people may not want to do this. If they do not want Wal-Mart to be a place where everyone knows their name, all they have to do is opt out of the loyalty program to keep their privacy—but then they will have to pay the full retail price.

Shopperception is not the only contextual company that wants to watch you and gather data while you shop. The online publication Verge reported on New York-based IMRSV’ssensor-based, data collecting camera called Cara, which they rent to any retailer for $40 a month. Cara can determine your age, gender and whether you are happy or sad from 25 feet away. It is in use in the Reebok store on Manhattan’s Fifth Avenue.

The store is using it to collect data on what customers look at and touch on the shoe wall. The store says it is trying to better understand the customer experience. The vendor says that it wants to put a Cara next to every cash register, ad and retail display in the world.

Back in the earlier times that Facebook’s Lessin referred to so fondly, that is what shopkeepers and bartenders did. It was called knowing your customers, and most people loved it. Now, instead of someone looking you in the eye, knowing your drink preference and asking how your work is going, sensors and data are being used to understand you.

In that light, it’s easy to join Lessin and yearn for simpler times, but retail will not turn back. Personal relationships cannot scale to global levels and it will take a great many small steps before most people are fully comfortable with the coming contextual age. Those who are already the best customers are the ones most likely to embrace the benefits of context. At every wave of new technology, some people opt out. They choose not to drive or fly. We recall a court case involving a teacher who banned students from using Google instead of libraries, because searching online was cheating. That was less than ten years ago.

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