As featured in The Wall Street Journal, Money Magazine, and more!
     

Do Retailers Know Too Much About Shoppers?

This article was written by in Consumer. 23 comments.


It’s no surprise that retailers track your purchases. It’s obvious at the grocery store, particularly if you sign up for the supermarket’s loyalty discount program. If you provide your address, you’ll receive coupons and ads tailored specifically to your buying habits. My local supermarket allows customers to sign up anonymously; the coupons are offered right at the point of sale rather than through the mail.

Retailers use shopping habits to profile shoppers. These profiles can be very accurate. When you have a store that sells more than just groceries and wants to be the one-stop shop for every single item one might need for living — like Target — mathematical and neuroscience geniuses can with a high percentage of certainty determine your age, sex, marital status, whether you have children, how far from the store you live, whether you have children or are planning to, and what websites you visit. They can gather data linked to a personal shopping identification number by taking multiple factors into account, including the products you buy, surveys your complete online, and the ads you use and don’t use.

TargetCombine this information with personal data that can be purchased, like what you talk about online, your political stances, and your charitable giving, there is no limit to the level of precision of your customer profile.

An article in the New York Times explains how a customer’s subtle shopping habits — perhaps buying more lotion than usual — resulted in the algorithm determining there was a high probability that she was pregnant. Target began sending ads to her house for products related to babies and pregnancy.

After seeing the ads arrive in the mail, the girl’s father stormed into the store to speak to the manager, blaming him for trying to convince his daughter in high school to become pregnant. Apparently, she was pregnant, but hadn’t told her father yet. She may not have been overtly purchasing baby-related items at Target to trigger this, but you can’t keep secrets from mathematics.

Here’s how that can happen:

[W]hen some customers were going through a major life event, like graduating from college or getting a new job or moving to a new town, their shopping habits became flexible in ways that were both predictable and potential gold mines for retailers. The study found that when someone marries, he or she is more likely to start buying a new type of coffee. When a couple move into a new house, they’re more apt to purchase a different kind of cereal. When they divorce, there’s an increased chance they’ll start buying different brands of beer.

Consumers going through major life events often don’t notice, or care, that their shopping habits have shifted, but retailers notice, and they care quite a bit. At those unique moments, Andreasen wrote, customers are “vulnerable to intervention by marketers.” In other words, a precisely timed advertisement, sent to a recent divorcee or new homebuyer, can change someone’s shopping patterns for years.

And among life events, none are more important than the arrival of a baby. At that moment, new parents’ habits are more flexible than at almost any other time in their adult lives. If companies can identify pregnant shoppers, they can earn millions.

The changes can be subtle. It’s not buying diapers in bulk that triggers the retailer’s pregnancy sensors. It’s the small changes in shopping habits that may not seem obvious to anyone other than the mathematicians and scientists who understand behavioral data and have applied it to customer profiling.

Do retailers have too much information on customers’ behavior, or are you comfortable knowing these companies can paint an accurate picture of your life and use this information to market directly to you? Do consumers have the right to a somewhat private life?

Photo: Patrick Hoesly
New York Times

Published or updated February 17, 2012. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦127,505
Rank: Platinum
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 23 comments… read them below or add one }

avatar Jeff @ Sustainable Life Blog

I think that the amount of information that retailers have on consumers is slightly unnerving. When I read the article I was shocked at what they kept on you, and i’m considering going to cash only from now on.

Reply to this comment

avatar Gary Foreman

Really good question. And one that will become more important in the future. When they first started creating credit scores no one thought that they could affect your car insurance rates or whether you got into grad school. Who knows what uses they’ll think of in the future for the data they collect today. I admit to be very cautious about what data I allow others to have.

Reply to this comment

avatar Luke Landes ♦127,505 (Platinum)

How cautious are you? Do you use cash?

Reply to this comment

avatar Ceecee ♦53 (Newbie)

It is up to the individual to give them the information. Obviously, if you want certain discounts, you have to have a store card. But you can opt to pay full price and keep all info private. It is still a choice.

Reply to this comment

avatar Luke Landes ♦127,505 (Platinum)

The only way to keep your shopping patterns private is to use cash. Even if you don’t join a loyalty program, the stores can aggregate your purchases by the ID associated with your credit cards or checks.

Reply to this comment

avatar Tom Murin

It is a bit freaky. I think of the movie Minority Report – they (retailer, government, etc.) know what you are going to do before you do. I recently read that Google search results are based on the person making the query – not based solely on the search string entered. I tend to look on the positive side. Perhaps we get solicitations for things I might want or need and less for things we have no interest in.

Reply to this comment

avatar Kyle

I find it somewhat creepy, but not enough to change my behavior. In the end, I guess I really don’t care that much.

Reply to this comment

avatar wylerassociate ♦162 (Cent)

I don’t have a big problem with retailers having this much information about shoppers when you consider how the government spies on citizens & people tell their whole life stories on social media. Just sign in to amazon.com and you’ll see a list of items that might be of interest to you.

Reply to this comment

avatar krantcents

I don’t have a problem with retailers knowing about my shopping habits, however I would not want thenm to sell it to a third party. I usually ignore target marketing unless I am interested in the product.

Reply to this comment

avatar shellye ♦107 (Cent)

While I’m not naive enough to believe that Big Bro isn’t watching us (he is, in a whole bunch of ways), I’m thinking that the truth in the Target story with the pregnant teenager leans more toward the possibility that the girl either signed up for some kind of mailing list or baby registry and Target bought that mailing list, rather than some conspiriacy to find out her shopping habits. She may have also gone to a clinic of some sort to find out if she was pregnant, and Target bought that mailing list. Retail demographics don’t always come from the retailer itself; they buy up mailing lists from companies all over the place who gather info.

Reply to this comment

avatar Rosa

Whatever they are doing to find *new* parents, their ad management is not so smart – my son is in school and I’m still getting Target baby coupons in the mail.

Reply to this comment

avatar Jenna, Adaptu Community Manager

It doesn’t bother me too much. Chances are they’ll send me some deals that I’ll actually need/enjoy.

Reply to this comment

avatar bax

I keep think that it’s already too late. For the very few of us willing to use cash for every transaction, they can probably infer valuable data points simply from the fact that we are using cash.

I for one, welcome our robotic overlords!

Reply to this comment

avatar Melissa@LittleHouseInTheValley

Until this came to light, most people probably didn’t realize just how far businesses go to try to market to us individually. I knew that they used my data to track shopping patterns, but I had no idea it went this far.

Reply to this comment

avatar jim

It seems to me that retailers dont’ know anything more than what we tell them by our shopping habits. If buying things I buy results in them sending me ads or coupons for other things they think I might buy then I don’t see the harm. I’d rather get ads for stuff they have a good hunch I’d actually want than getting random ads for stuff I clearly have no interest in.

Reply to this comment

avatar Diane Stewart

My thoughts exactly.

Reply to this comment

avatar DonnaFreedman ♦90 (Newbie)

It doesn’t bother me. Maybe it should. Suppose an insurance company bought such info; might the company look at its clients’ purchasing patterns and find reasons to dump those people/raise their rates based on a perception that they were buying more painkillers, more sweets, more saturated fats, more alcohol?
This would be especially annoying if the person was shopping for someone else. A relative of mine spent years helping a neighbor in declining health. The woman liked a glass of wine every evening and her doctor said OK. My relative would pick up extra wine for the neighbor along with the bottles she bought for herself and her husband. Might an insurer conclude, “Hmm, she’s drinking twice as much as usual. Is there a problem?”
My favorite retail-spying anecdote is still the guy who claimed he couldn’t pay all his child support because he was barely making his own payments and was in fact struggling to feed himself. The ex-wife’s lawyer subpoenaed his reward card info and found that the guy was buying high-end steak and wine. Ahem.

Reply to this comment

avatar Ella

Wow, I had no idea businesses could go that far. The story of the pregnant teen was crazy!

Reply to this comment

avatar Super Frugalette

I am expecting. I have purchased size 1 diapers at Target. I have the red card…my son’s school is enrolled through the red card to receive a portion of my sales…..and I do receive ANY coupons.

Who knew I had to buy lotion to get coupons?

Reply to this comment

avatar Einstein

I always try to throw ‘em off. Late night purchases of fresh mint toothpaste, gallons of salsa, and some ice cream probably leave retailers to think I’m soon to deliver a baby of my own.

Retailers know what you tell them. There’s no such thing as an open secret.

Reply to this comment

avatar PFM

I had purchased things for an ailing relative then started receiving AARP invites in the mail, hmmm, coincidence?
Info gathering is apart of every company and they’re willing to pay a good buck to be able to hone in their marketing efforts.
I don’t think there’s a way to opt-out unless you go to strictly cash but then you lose the discounts offered by stores, therefore you’re “paying” with your information to save some $.

Reply to this comment

avatar Robert @ The College Investor

It amazes me how retailers can track your card, know you bought toothpaste, already have calculated the average time to go through a tube of toothpaste, and then send you targeted toothpaste coupons before your tube is about to run out!

Reply to this comment

avatar qixx ♦1,895 (Half-Dollar)

All in the name of saving a few dollars. I don’t mind getting these targeted advertisements from the companies i do business with. The sold off data that produces advertisements for businesses that i don’t care to associate with is where i think they have gone too far.

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: