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Brick-and-Mortar Transparency: Are Phone Alerts the Best Notification for Collecting Consumer Data?

New technology allows retailers to collect data—such as location, contacts, apps installed—from their customers’ phones. But when we surveyed consumers, only 33 percent of them realized this might be happening.

On the other hand, when we surveyed consumers about stores collecting only their location, this number increased to 50 percent.

We know from previous research that when people are not aware of data being collected and don’t expect it to happen—and then find out about it later—trust can be eroded. How, then, can businesses create transparency around data collection?

The first solution we considered was posting in-store notices, but our research showed a very low awareness and retention of signage on the part of shoppers. We asked consumers to purchase a specific item in a store, and then after the purchase tested their recall of in-store messaging. On average, consumers recalled less than 10 percent of in-store signs. Even more telling, none of the shoppers we interviewed in Santa Clara County, CA, recalled seeing the consumer protection notice posted at the checkout lanes of every store they visited.

The next natural place to look when considering how to communicate with customers might be the phones themselves. After all, you’re only gathering data from people carrying their phones, so you know your message of transparency will reach the right audience. All they have to do is look at their screens. And according to a May 2013 Google study, 84 percent of smartphone shoppers use their phones to assist with shopping while they’re in a store.

Sounds promising, right?

But the Google numbers referred to shoppers who used their smartphones in-store just once a month or more. We wanted to more deeply understand the context in which shoppers used their phones while shopping, and so our researchers conducted a series of studies aimed at observing this technology and its usage.

We observed more than 2,500 shoppers at 12 different stores—ranging from stand-alone discount chains like Walmart and Costco to upscale mall retailers like Bloomingdale’s and Neiman Marcus—in different parts of the country, at different times of day, and on different days of the week.

Of the shoppers we observed, only 11 percent had their phones visible.

So, while the number of people who ever use their phones while shopping may be high, the frequency of use is actually quite low.

Our researchers also looked at phone use among people who were at malls but weren’t actively shopping—people walking between stores, sitting in common areas, or dining at restaurants. Among these people, just over 30 percent had their phones out and visible.

In other words, people at malls were nearly three times more likely to use their phones while they weren’t shopping than when they were inside a store.

The reasons for this are common sense: When customers are inside a store, they’re focused on the products. Not only are they less likely to talk on the phone—they’re less likely to talk to a present companion, because they’re busy looking at merchandise.

Also, shoppers’ hands are occupied. They’re pushing carts, reaching for wallets, tending to children, and testing out products. Of the shoppers our researchers observed, almost 40 percent had both hands occupied at any given moment, and 70 percent had at least one hand occupied. By contrast, only 20 percent of non-shoppers had both hands occupied.

Currently, phones are difficult to access and simply don’t add a lot of value to the shopping experience. We do think technology has a place in helping retailers provide transparency for customers, but any successful solution will have to work within the constraints of the shopping experience.

In fact, successful solutions will have to support and enhance the shopping experience. If you can find out what customers value, and then integrate technology in a way that makes for a better and richer in-store experience, you’ll reach your customers.

In our next post, we’ll discuss our research that shows what things people do value when they’re shopping, and how technology can support those things.

Written By

Ilana Westerman

Written By

Gabriela Aschenberger

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