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Facial Recognition Technology Profiles In-Store Retail Shoppers

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Malls and retailers are installing facial recognition technology, not just to stop thieves but to track shoppers and learn about customer demographics. This AI tech can collect data about a shopper’s age, gender, and even his or her ethnicity.

Getting to Know You

Once the preserve of airport security, casinos and law enforcement agencies, facial recognition software is now being used by retailers to track customers and profile their shopping habits, as well as prevent losses from theft.

JOS is a firm that works in facial recognition for the retail sector. It assists retail stores with improving their understanding of their own customers by way of profiling those who walk through the doors and tracking their movements within the shop.

“One of the big things brick-and-mortar retailers are getting into now is knowing their customers … tracking who’s entering their mall and how they’re behaving,” Mark Lunt, Jardine OneSolution (JOS) group managing director, told CNBC.

The type of information gathered by the retail facial recognition technology includes “how many people are coming in, age, ethnicity, gender — it’s all about knowing the foot traffic better and trying to serve more appropriate offers to those customers.”

Respect for Consumer Anonymity

JOS ensured that all customer identities remain anonymous throughout the data collection process via facial recognition. It also underscored the potential benefits to both the retailers and the shoppers themselves. The goal is, after all, to improve the customer experience by gaining a better understanding of precisely who the shoppers are and what they want from a store.

Jardine OneSolution described several types of changes that can occur as a result of facial recognition technology use. One involved adjusting the store’s music in order to better suit the shopper’s mood.

That said, JOS recognises that retailers continue to experience limitations in the way they can use and protect the data they collect. “Technology is not the barrier to the systems being implemented, it’s privacy concerns, it’s cultural concerns,” he said.

Customers Want Privacy

Consumers regularly read headlines about the dubious use of collected personal data and about the latest data breaches. The idea of using facial recognition technology to obtain information about them still causes many shoppers to bristle. This, despite massive investments by retailers into making sure data is securely stored and can be reached only by authorized parties for acceptable purposes.

A survey carried out in 2015 by software firm CSC, published in Computer Weekly, found that 74% of retailers were using technology in-store to track customers, while 30% were actively using facial recognition software. The software was particularly popular with fashion retailers, 59% of which had installed it in their stores.

In terms of customers, millennials were more comfortable with the use of the software than older shoppers, with 28% of those surveyed who said they believed it enhanced their shopping experience aged between 16 and 24.

Big Brother is Watching You Shop

However, over 70% of respondents said they were unhappy with retail gizmos recording their age, gender and how long they spent inside stores, with 72% of those aged over 55 complaining that they found it intrusive.

“When technologies are new, people have a level of comfort or discomfort with them, becoming more comfortable as time moves on,” Ramanan Ramakrishna, CSC director and regional general manager of UK, Ireland and the Netherlands for emerging technology, told Computer Weekly.

“As long as retailers educate consumers on what they are using collected information for and give customers an opportunity to opt in or opt out, we will see consumers becoming more comfortable opting in with some of the data they might not be comfortable with today.”

Lunt agreed that businesses must maintain a high level of sensitivity to these consumer concerns. Equally, customers need to take care with the way they share their own sensitive data.

Saks: An Early Adopter

Walmart trialed the use of facial recognition technology in its stores but abandoned its use. The retail giant said that it was not satisfied with the return on investment.

However, it has proved more successful at luxury brand Saks, an early adopter of the controversial technology, which is used in many of its stores, including its flagship outlet in Toronto’s Eaton Centre, mainly for loss prevention.

The software converts in-store photos of suspected thieves into a biometric template and checks them against a database of known shoplifters. Cameras are networked so that the output can be viewed in the firm’s New York headquarters.

“For the management of a store there are two issues: minimise your losses and increase sales,” Al Shipp, CEO of San Francisco-based 3VR, a video intelligence software provider, told the UK’s Guardian newspaper. “Our platform will help you do both.

“The same platform that investigators use to identify shoplifters [also] helps retailers figure out which displays are working better, and where the customer traffic is.”

According to the Guardian, high-end retailers and hotels in Europe routinely use FR technology to track VIPs and celebrities and ensure they are offered preferential treatment.

FR Use Widespread in Asia

What’s more, roll-out of facial recognition is gathering speed in Asia, particularly in China where it is common to pay for food, withdraw cash from an ATM or even take out loans using FR.

More recently, convenience store giant 7-Eleven installed the software into 11,000 of its stores in Thailand. The facial recognition and behaviour-analysis technology, developed by US firm Remark Holdings, will be used to track loyalty cardholders, monitor customer traffic, stock levels, suggest purchases and even track shoppers’ emotions. Remark claims the software is 96% accurate, BusinessInsider reports.

Facial Recognition for Good

Counterpoint Research forecasts that as many as one billion smartphones could have integrated facial recognition technology by 2020 – that’s 64% of smartphones compared with just 5% last year, according to Forbes. What’s more, 54% of Americans actually plan to use the technology to protect their personal data, says a survey by FaceFirst, an FR software provider.

Since 2008, UK grocery chain Budgens has used the software to prevent alcohol sales to underage drinkers, while Californian burger chain CaliBurger is linking FR to its loyalty card system and speeding up transactions times by recognising customers as soon as they arrive. Walmart has even patented technology to read customers’ expressions and measure their satisfaction as they wait in line at the checkout.

While customers may be wary now, these attitudes should change once they comprehend that the technology will benefit them in some way, argues Colin Peacock, visiting fellow at the University of Leicester in England and strategic coordinator for Efficient Consumer Response Europe’s Shrinkage and On-Shelf Availability Group.

“I think privacy is a concern,” Peacock told the US National Retail Federation’s Stores Magazine. “However, what history has taught us, especially in the United Kingdom, is that when consumers perceive there are benefits for them personally … then there will be a better acceptance with the benefits outweighing privacy concerns for the majority.

“I think the same will be true of facial recognition. If consumers perceive a benefit, then acceptance will be good.”

Note: Article updated on 7.6.2018

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Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.