Joseph Turow Warns of Discrimination and Privacy Issues When Retail Stores Track Customers

By TAP Staff Blogger

Posted on March 2, 2017


When it was reported a few years ago that Nordstrom tested a new technology that allowed it to track customers’ movements throughout the store by following Wi-Fi signals from their smartphones, shoppers were unnerved. The purpose for this tracking by retailers is to gather data about in-store shoppers’ behavior and moods. Using video surveillance and cellphone signals, retailers can learn information such as shoppers’ gender, how many minutes they spend in a section of the store, and how long they look at merchandise before buying it. The information is then used to offer customized coupons to customers as well as to change store layouts or displays. Some customers appreciated customized coupons appearing on their smartphone while they were in the store; but others expressed that it was creepy to be “stalked in a store.”


Fast forward 20-30 years, it is predicted that “half of Americans will have body implants that tell retailers how they feel about specific products as they browse their local stores,” reports Annenberg School for Communications professor Joseph Turow. In “The Aisles Have Eyes: How Retailers Track Your Shopping, Strip Your Privacy, and Define Your Power," Professor Turow reveals how highly-competitive brick-and-mortar stores, such as Macy’s, Target, and Walmart, are currently using data mining, in-store tracking, and predictive analytics to impact the way their shoppers buy. This degree of tracking and analytics has privacy advocates raising warnings about the legality and ethics of stores amassing detailed information about its customers.


In addition to the extensive privacy concerns, data mining and in-store tracking that is used to offer special deals to individual customers evokes issues of discrimination against some shoppers and preferential treatment of others.


In a recent article for The Atlantic, “The Future of Shopping Is More Discrimination” Professor Turow points out that “there’s no law of shopping stating that sellers will treat customers better and better the more they learn about them. In fact, the fallacy of expecting that to happen becomes clear when examining how the act of buying things has changed in the past 250-plus years.”


Below are a few excerpts from “The Future of Shopping Is More Discrimination.”


Trading Privacy for Coupons

By now it is industry consensus that brick-and-mortar merchants—the department stores, supermarkets, specialty stores, and chain stores that still sit at the center of the retailing universe—will succeed only if they turn those locations into facilities that track shoppers using wifi, Bluetooth, light beams, undetectable sounds, facial recognition, and more, even implants. Further, the people in charge of these retailers see it as a top priority that coming generations of customers learn to think of this surveillance as natural, even welcome—who doesn’t like a discount?


This push pertains to a topic that in other realms is far more controversial: Policy experts, privacy advocates, corporate executives, and academics are arguing fiercely about the legality and ethics of data mining by online advertisers and the government. Meanwhile, retailers are doing the same thing and attracting comparatively little attention. As they continue, they are quietly sending consumers the message that offering up information about themselves is simply a prerequisite in a new era of shopping.


Shopping Discrimination in the 1800s and 1900s

As many European immigrants poured into North America during the 18th and 19th centuries, the peddling business migrated with them. ... Settling down [and establishing general stores] allowed merchants to develop more-personal relationships with their customers than they could going door-to-door. Yet personalized deals increasingly caused angst for shopkeepers, perhaps more than when they were itinerants. Customers suspected that grocers of ethnicities different from their own overcharged them or supplied them with lower-quality products. Many black people who frequented stores owned by whites were especially suspicious about this opacity of price and quality.


Early on [in the 20th century], department stores divided their clientele into two broad groups, the more affluent “carriage trade” and the poorer “mass” or “shawl” trade—welcoming the former on the upper levels and ushering the latter toward the basement. Store managers selected experienced and native-born women as salespeople for the higher-price departments, and placed neophyte and immigrant women into areas that sold less-expensive goods. As for the large grocery chains, store owners often avoided low-income neighborhoods, especially ones that were predominantly black. The supermarkets that did open up in those areas tended to be dirtier and have lower-quality food and less variety than those in more affluent districts. These disparities rarely made the headlines.


Retail Stores in the Future: Tracking Shoppers’ Every Move

Even those who think they will end up better off under this new system may not be accounting for some possible outcomes they may not like. Retailers might hire statistical consultants to generate reports about people’s eating habits based on the food they buy, about their weight based on the clothes they look at online and in the store. They might make predictions about people’s health based on the groceries and over-the-counter drugs they purchase. The resulting portrait of each shopper may result in some personalized coupons to redeem now, or even ads from insurance companies that have determined someone to be a likely target for specific policies. But this picture may turn sour as one ages, when statistical formulas start to make unflattering inferences about one and one’s family. Consider, too, that some retailers sell or trade the information they compile about their customers in possibly unwanted ways; some even assign “attractiveness” scores to shoppers based on the data.


Much of this will be happening—or is already happening—without Americans’ consent or knowledge. Yet this new stage of retailing—a stage that harks back to 18th-century strategies of price and product discrimination—is only beginning. Merchants, left to their own interests and in response to hypercompetition, will create a world where what individuals experience when they shop will be based on data-driven profiling. And at present, shoppers have little or no insight into the profiles and how they are used. The common connotations of the word surveillance have yet to encompass the world of retail.


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Joseph Turow is the Robert Lewis Shayon Professor of Communication and associate dean for graduate studies at the Annenberg School for Communication at the University of Pennsylvania. His research focuses on digital cultural industries, especially at the intersection of the Internet, marketing, and society, as well as studies on database marketing, media and privacy, digital out-of-home media, the process of innovation in the mass media, and the relationship between media and the medical system.