Retailers: What are you opting for?

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Since customer blowback from Nordstrom’s tracking of foot traffic via wi-fi signals from customers’ smartphones in its brick-and-mortar stores was reported this summer, there has been a predictable and merited discussion as to what privacy protocols are justified in a more or less inevitable move to extend online traffic tracking practices to the offline world.

Legislation and consortia to follow

In October, an agreement was announced between the Future of Privacy Forum and New York Senator Charles Schumer, who had warned against this issue two years ago. As reported, eight cell phone tracking companies agreed to a code of conduct, whereby shoppers will be alerted that they are being tracked and given the opportunity to opt out. Very likely this will not be the last attempt to establish allowable standards for the hyperlocal, commercial tracking of cell phone signals and legal limits may ultimately be set.

But is “opt out” enough?

We won’t really know whether consumers will settle on such tracking as a default mode of modern shopping until the technology is more widely used. But a standard to “opt out” is less consumer-friendly than an “opt in” requirement and the tracking of cell phones carried by children may prove a sticking point.

My guess is that those retailers that find attractive-enough draws for their customers to opt in to the added value that their in-store digital experience provides will be the winners in this challenge. Gigaom Research analyst Phil Hendrix has written several reports on the opportunity for local mobile retail and advertising apps, including Survey: the mobile shopping apps consumers value most, Why mobile must be part of the shopping experience, and The promise of hyperlocal: opportunities for publishers and developers. For those customers and for traffic not drawn to the positive experience offered? In that case, relying on data from other providers, such as Google or Verizon, that generally have more extensive opt-in agreements, may be the way to go.

Many retailers may opt for caution this holiday season, but the options are certain to become more compelling and more complex in 2014.