In the children’s tale “Hansel and Gretel,” the two titular children leave a trail of breadcrumbs to find their way out of the forest and back home. And when you’re shopping in certain stores, you might be leaving your own little breadcrumbs behind for retailers to track your spending – even if you don’t intend to.
But this isn’t child’s play – some retailers carefully track shopping habits as a way to offer new products, learn more about their customers, and even adjust prices. Both brick-and-mortar and online retailers have systems in place to scour for useful information that increases their chance for revenue.
The idea of “Big Brother” watching the way you shop may have you feeling a little nervous. But by understanding exactly which breadcrumbs you’re leaving behind at your favorite stores, you can better control what you share – and what you don’t share – with data-hungry retailers. Knowing more about retail tracking can also help you spot personalized marketing ploys designed to encourage thoughtless impulse purchases.
While nothing really sinister is going on – after all, retail tracking is perfectly legal – the more you know, the more likely you are to shop successfully and frugally.
How Retailers Track Your Spending
1. Your Website Visits
Say you were looking at a new kitchen mixer, so you visited an appliance website that offered one on sale. You thought about it, but just weren’t ready to buy. The next day, you navigate to the site again, only to find that the mixer is no longer on sale. Is it just the luck of the draw?
Probably not. The first time you visited the website, tracking software identified you as a new user, so prices may have been adjusted as a way to entice you to buy and become a frequent customer. However, during subsequent visits, the website can identify you as a returning customer, adjusting the prices higher.
This is a tactic called “price customization,” and it’s completely legal. In fact, The Economist names Amazon as one of the pioneers of this type of pricing (although Amazon has not discussed actual pricing models with The Economist).
Some websites reward customers who are slow to make a purchase by tracking visits to the site, and then sending corresponding coupons for the products viewed as a way to instigate a purchase. And, since you don’t really know which sites reward new customers or old customers, it’s a bit like playing online shopping roulette. Ultimately, the retailer uses website tracking to ensure that it benefits.
2. Your Operating System
Your computer, tablet, or smartphone operating system might say a lot about you – at least, to retailers. In 2012, The Wall Street Journal found that Mac users paid, on average, $20 to $30 more per night than PC users for the same hotels booked via the popular travel site, Orbitz.
According to Forrester Research, the median annual income for Mac users is significantly higher than PC users – $98,000 vs. $74,000, respectively. Therefore, those using iOS were shown higher rates because they simply were perceived to have more disposable income. Furthermore, Mac users are 40% more likely to book a 4-star hotel, which also affects results shown when searching for and booking a hotel.
In a statement, Orbitz noted that they weren’t targeting Mac users per se, but offering a “personalized” experience for all of their users. And, as long as sites don’t discriminate or adjust prices based on race, gender, or religion, they have carte blanche to do whatever they want in terms of raising or lowering prices for individuals.
3. Search Terms
The more specific you are when searching for items online, the higher chance you have of getting a great deal. Online retailers know that, just like in brick-and-mortar stores, people browsing randomly are less likely to make a purchase than those who enter a store with an express item in mind. Therefore, tracking software can adjust prices simply based on the search terms you used to find a website.
For example, if you search for “women’s shoes,” you’re less likely to see a coupon code displayed than someone who searches for “red pumps size 7.” The second person may find a coupon code and additional discounts simply based on the fact that she is probably more likely to make a purchase.
4. Big Data Sources
The tech world is filled with data brokers – individuals and firms that use software to scour public resources to find out more about consumers. They can then compile that data and sell it in blocks to interested parties, not the least of which are retailers.
Big data offers retailers a peek into your life so they can more directly market to your current status, income, and even location – the more a retailer knows about you, the more targeted the marketing materials can become. If a retailer knows that you just got married, they can send loan offers for a new house. If you have a new baby on the way, you can expect to see more ads for strollers and car seats.
Big data comes from legal sources, such as:
- Public social media posts and accounts
- Internet tracking software
- Browser cookies
- Public information on employment and family status
- Your purchase history (a furniture store where you purchased a new couch, for example, might sell their data to a mining firm)
- Your address
Almost everything you do – from chatting with friends online, to looking for a new home – can be collected, stored, and sold as big data to retailers who want the best chance at increasing their share of your wallet.
5. Cell Phones and WiFi
In the fall of 2012, Nordstrom instituted a new program whereby customers who used their phones to search for and find WiFi in-store (Nordstrom offers WiFi free to customers) could have their movements tracked as they perused the store. The retailer posted signs so customers understood the new policy, and then went to work collecting data about movement patterns, how long a customer stood in front of a display, and how likely they were to make a purchase in certain departments.
Retailers use this information in”predictive modeling,” or to help stores predict how, when, and where you’ll spend your money long before you take out your wallet. Essentially, cell phone tracking does in-person what web retailers do online: Uses your shopping habits as a way to improve your experience and increase the chance that you’ll spend money.
Ultimately, due to customer dissatisfaction, Nordstrom discontinued the practice in May of 2013. However, other stores – including Cabela’s and Family Dollar – still use the practice today.
6. Store Loyalty Cards
Stores often market loyalty cards as a way to gain access to special discounts. And while loyalty cards are designed to keep you coming back and spending more money at one specific retailer, they also tell the retailer a lot about your spending habits.
Let’s say you use your store loyalty card to get a discount on a new vacuum cleaner. Your loyalty card not only helps you get a discount, but it also stores your purchase under your loyalty profile for future reference. The next week, you get a book of coupons for cleaning supplies from the same store.
It’s not a coincidence – loyalty cards gather data for targeted marketing campaigns. Some loyalty cards are even linked to your cell phone and email, so you receive texts and messages about new products, discounts, and coupons, which further increase your propensity to spend.
How to Limit Data Tracking
If you’re not happy with retailers tracking your spending habits and lifestyle, there are a number of ways to limit it. Still, if you use the Internet, buy anything online, use loyalty cards, or give your email address to any cashier, you’re probably being tracked in some way.
The only way to stop tracking altogether would be to stop shopping online and only use cash for purchases. Still, you can reduce the adverse affects of consumer tracking by limiting what you share and how retailers (both online and brick-and-mortar) use that information.
1. Clear Your Cookies
When you visit websites, small pieces of data (“cookies”) are installed on your browser. This data tracks when you visited a website, what led you to that website, and what happened while you were there. It’s the same tracking information that might mark you as a returning visitor, so it’s always best to clear your cookies.
Just open your browser, navigate to “Options,” and then open “Tools.” You should find cookies below the “Privacy,” tab and it only takes a couple of seconds to click “Clear Cookies” and remove the data from your computer. Keep in mind that new cookies are added all the time, so clearing them regularly is optimal.
2. Download a Tracking Detector
Avast, a free program, protects your computer from viruses, but also detects website trackers and gives you the choice to disable them. This provides some control in how much information companies can mine from you as a consumer. You may be surprised to see just how many companies are tracking your activity.
3. Scrub Your Social Media
Take a minute to review what you’re sharing on social media, and what that information might mean to retailers. Chances are that if you’re breaking the news about a new baby, you’ll see and receive ads on baby gear. If you don’t want retailers targeting you, set your profile to private, and be cautious about what you post publicly.
4. Opt Out
Some big data companies have banded together and agreed to not track consumers locally if they add themselves to the Smart Store Privacy registry. Add your phone’s WiFi or Bluetooth address to the list so that data companies will not track your movements through a store.
5. Do Not Use Free WiFi
When you use a retailer’s free WiFi, you’re not on a secure server. In fact, as soon as your phone pings the WiFi, you might be transmitting location data, used for predictive modeling while in the store.
Information sent or received while on free WiFi is often used for marketing purposes, so if you don’t want a store tracking you, turn your WiFi off and use your cell data instead. And if you do use store WiFi, never log in to secure sites using your passwords, which are easily hacked when left on a public server.
6. Buy a Cheap PC
If you’re a Mac user and are serious about getting the best deals online, it might be a worthy investment to purchase a cheap PC for online shopping. A small PC netbook is fairly inexpensive and is primarily designed for surfing the Web, and will help prevent your preference for a Mac driving up the cost of your next trip. You can also use a tool like User-Agent Switch from Chrome to spoof the machine and browser you’re using.
7. Open a Private Browser
Firefox, Chrome, Safari, and Internet Explorer all offer some type of “incognito mode” for browsing. Simply right-click your browser’s icon and look for something that says “incognito” or “private.”
When using these modes, your online movements aren’t tracked, and all of your history is deleted when you shut down your private browsing window. While a store might still be able to see that you visited their website, the cookies cannot be stored, so each time is like the first time.
8. Use a Proxy Server
If you really want true anonymity when shopping online, try using a proxy server or virtual private network (VPN) such as through IPVanish to remain completely anonymous. Proxy servers assign a random IP address to your computer when you utilize the service to surf the Web. That way, stores don’t know your location or whether you’ve visited their website before.
To find a proxy server, just run a search for a free proxy server and type URLs directly into that site. While it might not be the most convenient way to surf, it does work well as a way to compare prices from regular surfing versus proxy surfing to ensure you’re getting the best deal.
Retailers tracking your spending habits is kind of a necessary evil. While you want the best deals and discounts, being a frequent customer or even being perceived as someone with a high median income can definitely cost you.
By knowing what retailers are looking for and how to get rid of trackers, you can beat them at their own game. Allowing trackers when they could benefit you and blocking them when they’re costing you money is the best way to play both sides of the fence.
What other tips can you suggest to prevent retailers from tracking your shopping habits?