Nordstrom drops technology that tracks shoppers through smartphones

Nordstrom has ended its experiment with Euclid, a sensor technology that uses shoppers' smartphones to monitor their movements throughout a store.

On Thursday, Nordstrom announced that it had ended trials with Euclid Analytics, an increasingly popular — and, to some, frightening — software that uses in-store Wi-Fi networks to access shoppers' smartphones and track their engagement and shopping habits.

When shoppers enter select stores, Euclid sensors detect the MAC addresses that smartphones emit when they scan for wireless networks.

While Euclid isn't the newest kid on the block (it's been around since 2011), the analytics company is beginning to gain a major following among large American retailers, as evidenced by past partnerships with Nordstrom and Home Depot.

For retailers at large, Euclid can be an unprecedented tool, providing them with precise insights about marketing and product placement. It allows them to see which displays customers are flocking to, in addition to how store layouts translate to purchases. Retailers can also use Euclid to decide how they should tailor their staffing to deal with foot traffic.

For Euclid, however, success and notoriety haven't come without public scrutiny. Lawmakers and civil liberties groups are beginning to wonder just how safe it is to have a company monitoring your smartphone without your consent.

END OF THE AFFAIR

According to Nordstrom, the company used Euclid in 17 of its stores nationwide before pulling the plug Thursday.

"As we look to improve our customers' service experience and stay relevant to their needs, we'll continue to try new things out," Nordstrom spokeswoman Tara Darrow said in a statement.

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"We always said Euclid was a test for us. The test is over and we'll now evaluate the results from it, along with results from other initiatives we have going on that are designed to better serve our customers."

Home Depot also told Forbes its tests with Euclid are over and that it does not use the software anymore.

HOW IT WORKS

All of Euclid's information is aggregated. In other words, it doesn't tell a retailer that a 35-year-old Caucasian man just bought a pair of jeans; it says 14 people stood at the jeans display between the hours of 3 and 4 p.m. And it won't track shoppers to their next location in the store; it only registers once a shopper is picked up by another sensor.

For now, Euclid is opt-out. If shoppers want their activities to remain anonymous, they can go to Euclid's website and enter their phone's MAC address, which will erase their activity and prevent the service from tracking them. Buyers can also avoid detection by disabling the wireless Internet on their device before entering a business. Nordstrom had posted signs about how to opt out at the entrances of its stores that used Euclid.

What Euclid also doesn't do is identify the names of the people it tracks or distribute any of the information it collects. According to its privacy policy, it does not rake in data about who shoppers are, who they call on their phones, or any of the sites they've visited. It also promises to never sell any of the information it compiles.

"I can only speak to what we do right now, and that is, we have no intent to ever sell this information, for instance to a data broker, link it to any kind of personal information and that's just not something that's in our plans for now or in the future," Euclid spokesman John Fu told ABC 7 Denver. He added that the company is opposed to an opt-in system because it would not allow retailers to gain a complete picture of who's in their store.

PRIVACY CONCERNS

Euclid's publicity company referred MSN News to its privacy page for inquiries about the safety of the data it collects and its opt-out system.

Privacy advocates, however, aren't sold on Euclid's promises. They say the firm's opt-out process is too complex for consumers, and they worry about the staying power of its promises. 

 

"If you're going to track people, they need to have easy way of opting out," said Jay Stanley, a senior policy analyst at the American Civil Liberties Union. "Forcing people to enter a MAC address is too difficult — most of them don't even know what a MAC address is."

Stanley added that businesses — especially startups and new companies — can change their business plan on a dime. Cash-strapped and desperate, they can decide to sell the information they once promised to protect.

"As an individual, you can't put faith in one company's promises, which always come fast and furious with new companies and can fade away," Stanley said.

Already, Euclid has been taken to task by Sen. Al Franken, D-Minn., who urged it in April to stop tracking customers without their consent.

"People have a fundamental right to privacy, and tracking a consumer's location and movements without permission violates that right," Franken said in a statement. "Euclid's use of opt-out location tracking — regardless of whether a consumer actually enters a store equipped with this technology — simply doesn't meet the standard of privacy Americans should be able to count on."