June 27th, 2008

Attention, Shoppers: Soon Nielsen May Be Rating You

By Richard Mullins
The Tampa Tribune

The next time you go shopping, the cameras in the ceiling may be watching for a lot more than shoplifters. They could be helping track your every step through the store to find out why you’re buying that pasta sauce, that Barbie doll or that case of beer.

Yes, they’re trying to read your mind.

TV ratings giant Nielsen is branching out beyond television and into grocery and retail stores, installing high-tech cameras and sensors in hundreds of U.S. stores to see (anonymously) if all those fancy product displays actually persuade people to buy differently.

Do women with children buy Bertolli pasta sauce after trying a free sample in the store? Do men age 18-34 care about in-store coupons for Axe deodorant? Did anyone care about the race-car display for Nintendo’s big new videogame?

Retailers have never tried quite this kind of research. And Nielsen’s project has attracted companies like Wal-Mart Stores Inc., Target Corp., Kmart, Walgreens, Procter & Gamble, Coca-Cola Co., Nintendo and many others.

Ultimately, the project could provide a much-needed boost to Nielsen in the Tampa Bay area, if it handles privacy rights carefully, and could help Nielsen shape the way stores arrange their toys, food and clothing.

That’s because shoppers can make 70 percent of their final buying decisions in the store (choosing Prego versus Ragu sauce, or Bounty versus Brawny paper towels), according to research at consumer goods giant Procter & Gamble Co.

For that reason, Procter & Gamble spends $10 billion per year around the world on things like product discounts and more prominent display space.

Ann Mooney, an associate marketing director for Procter & Gamble’s global operations, said the company puts a lot of work into that area, but “until this project, we’ve not had very specific information on what we’re getting for our really significant in-store investment.”

Program May Boost Nielsen

The project could become a much-needed area of growth for Nielsen, which dominates TV ratings. But that market is becoming more complex and expensive to monitor as people use DVRs to skip TV commercials and spend more time online and with video games.

Meanwhile, Nielsen has become a privately owned company, cut back on employment and is shifting its work force worldwide. This week, Nielsen announced another 170 layoffs in the Bay area, eventually bringing local employment down to 1,300.

Within that upheaval, Nielsen has built a secretive 3,000-square-foot prototype grocery store inside its Oldsmar data center, complete with grocery aisles, checkout lanes, shopping carts and thousands of dollars in products. (The site is closed to all but a half dozen Nielsen employees.)

Boxes of Tide detergent, cartons of Folgers coffee and rows of cereal boxes pack the model store so technicians can mimic shopping to see whether Nielsen’s array of sensors can secretly track people as they shop.

Publix, Sweetbay Not On Board

Here’s how Nielsen’s system works. The company installs digital sensors throughout the store that precisely measure a person’s height, noting that one 5-foot 3-inch person with a 3-foot 2-inch companion went right to the produce section then the cereal aisle before checking out.

Infrared sensors on carts track their path down specific aisles, and note how long shoppers stay there.

Nielsen also has hired 1,500 people nationwide to walk aisles of hundreds of stores counting customers and mapping how products are displayed. So far, Nielsen has more than 50 percent of the grocery and retail companies in the nation on board with the project. Publix and Sweetbay have not yet signed up, but Nielsen hopes they will.

Nielsen then compares stores with different layouts or promotions: One Target store with lavish displays of Coca-Cola and basic displays of Cheerios.

“Before this project, Kroger might know that 16,000 people shopped there on a given week,” said George Wishart, Global Managing Director of Nielsen’s “In-Store” project. “But they couldn’t know who is in the store at 10 a.m., what messages they’re seeing and if they are reacting in the right way.”

Now, Nielsen is starting to see shopping patterns emerge.

In a recent test, Nielsen saw sales of some groceries jump 126 percent when stores stacked them next to the produce section, but sales jumped 520 percent if the store put that same stack between the main aisles and the refrigerated meat section by the back of the store.

Grocery and retail stores typically charge product companies fees for that kind of placement, so the Nielsen data could determine whether that placement is worthwhile.

Controlling Personal Access

There’s good reason to be careful with this kind of consumer data. While customers may appreciate special discounts meant just for them, they can also bristle at the idea of being watched too closely.

Also, assembling data creates an inherent risk of it leaking out unintentionally, despite security precautions. The parent company of the Sweetbay grocery chain in March said a security breach of its computer system may have exposed 4.2 million debit and credit card numbers to theft, making it one of the largest such cases in the nation.

Nielsen executives say they’re aware of the risk. The company purposely avoids matching a shopper’s name with purchases. “We don’t identify individual people, just where they go in the store,” said Nielsen spokesman Gary Holmes.

At the same time, grocery stores regularly conduct exactly that kind of identification, recording purchases of individual people through membership or affinity cards. That way, stores such as Target can mail customized coupons to its shoppers, with discounts on just the kind of products they regularly buy.

However, Target wouldn’t know where a person walked through the store on a given day. For example, did sales of Coke jump in a given week because there was a big display just installed? Probably not if few people walked past the display, which Nielsen’s cameras could show.

“It’s OK if they use information in an aggregated fashion,” said Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse. As long as no one company goes too far, and handles the data securely, the risks to privacy are lower.

“The key concern we have with schemes of this sort is whether they collect information that’s personally identifiable to you.”

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