How Retailers Track Customers Online and Offline

Kiplinger's spoke with Joseph Turow (pictured above), a professor of communication at the University of Pennsylvania and author of "The Aisles Have Eyes: How Retailers Track Your Shopping, Strip Your Privacy, and Define Your Power," about some of the various ways your favorite retailers may be tracking you.

Why are retailers tracking us? They want to send messages to customers based on their history with the store, their location in the store and their value to the store. For example, a store may see that you're near the women's shoe department and know that you’ve purchased shoes there before. It then sends you a text message or an advertisement via the store’s app on your phone offering you 20% off if you buy shoes in the next hour.

How do retailers track their customers? Inside the store, many retailers—particularly the largest chains—use devices called beacons, which connect to your phone's Bluetooth signal. Stores can also track you through your phone's Wi-Fi connection. Outside the store, retailers can track you with GPS. If you're near competitors, for example, retailers might send you advertisements or coupons to lure you to them instead. When you use a frequent-shopper card, you allow a company to collect data about what you buy, too.

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Can customers use any tricks to get discounts? If you save a coupon on your phone to use in a store, keep it there for a while. Or when you're shopping online, put something in the cart and leave it there without buying. If the store thinks you're not going to act, it may offer you a larger discount.

What else do stores do with the information they collect? If you look at companies that sell marketing data, such as Acxiom and Experian, a lot of what they have comes from retailers. A store might, say, sell information about which over-the-counter drugs you buy to a company that wants to sell you insurance.

What's the harm? There are winners and losers. In a way, we're back to the era of peddlers, who used what they knew about customers to charge them different prices or show them different items. Some companies might want your business because of your salary or how much you spend. But if you're not valuable to a store—say, because you only buy bargains—it will ignore you.

How can customers protect their privacy? If you don't want to be tracked in a store, shut off Wi-Fi and Bluetooth connections. Avoid using the store's app, participating in its loyalty program or paying with a credit card.