Facial scanners, talking vending machines and virtual stores in metro stations... the retail sector's innovation looks revolutionary. But how will consumers react and are there limits to shopper surveillance?

Biometric face scanners that recognise you from your Facebook page as you enter a store, 'intelligent' kiosks that ask to read your shopping list and suggest recipes for that evening's supper and CCTV systems calibrated to alert sales staff if you loiter too long at a fixture. It sounds like something out of Steven Spielberg's Minority Report – in which Tom Cruise has a retinal scan at a shopping mall before he is greeted personally by a video advert recommending he tries a Guinness – but science fiction is already fact in the 21st century British High Street.

Some of the reconnaissance techniques already available, or currently on trial, at a store near you will doubtless raise the hackles of privacy campaigners. Yet the hi-tech gizmos being deployed include other innovations that may be celebrated rather than slated – 3D augmented reality software to help you try before you buy (Tesco and Harrods), so-called magic mirrors instead of changing rooms (Marks & Spencer, John Lewis and New Look), Quick Response barcodes tracing the provenance of a particular garment back to the
weaver (IOU Project) or in-store sat-nav to help you find your way around (Tesco).

As stores wrestle with the challenging complexities of simultaneous bricks-and-mortar, web and mobile retailing – or what David Martin, joint managing director of brand design agency M Worldwide, calls an "immersive, multichannel consumer experience" – the bumper opportunities for the electronics sector are clear. But are some of the more invasive techniques of the security industry appropriate for the High Street?

Global IT consultancy Wipro is exploring the privacy implications of a new in-store digital kiosk which identifies shoppers via photographs they post on Facebook and other social networks, and then uses that information to target them when they enter a store. It firmly believes such moves are entirely logical.

"We're all used to having cameras in stores and we've become accustomed to being recorded," says Vivek Venugopalan, chief technologist for retail and consumer packaged goods at the Bangalore-based tech firm, "but the question now is whether it makes sense for retailers to throw away all that valuable footage or apply it to improving the retail environment. I'm not suggesting that entries on Facebook would be used commercially without a person's knowledge – opt-in will be essential – but our experience is that younger people, in particular, are willing to trade personal information for better, more targeted offers. We're merely joining the dots between online and offline shopping experiences."

DIGITAL GENERATION
Venugopalan believes that the inexorable rise of the smartphone – now used by one in three adults in the UK according to telecoms regulator Ofcom – is the perfect conduit for dovetailing the needs of retailers and customers. "Younger people love their phones and are more au fait with digital technology," he says. "They are the key target for a host of new mobile solutions that will soon allow them to order and pay for products virtually and instantly as they pass a shop window or poster hoarding, simply by pointing their phone at them."

While Wipro is now "aggressively targeting UK retailers" with its recognition system – and believes the first trial will begin here within 18 months – it was a children's charity that made UK history in February with the first interactive advert. Launched by Plan UK, the 40-second ad used facial-scanning technology to distinguish men from women and to offer different messages. Women were targeted with information about female education in poor countries, while men were directed to the charity's website.

Although campaigners from the Open Rights Group called the ad "creepy", the era of so-called intelligent promotions is long overdue, argues Chris O'Malley, director of retail marketing at Intel Corp. "While I believe that more sophisticated scanning is the key to retailing's future, the extent to which the new generation of face- recognition technology becomes truly effective depends on the public," he says.

"Most of the applications of scanning in use in the UK today are anonymised, merely giving information on gender and likely age group. With co-operation from consumers though – who we believe will agree to swipe their phone as they enter a store, as long as there is inducement in the way of additional service or attractive discounts – the applications could become extensive."

BUSINESS INTELLIGENCE
One of Intel's trailblazers is an interactive vending machine. Developed in the US in association with food giant Kraft, it allows stores to talk directly to shoppers – who must first agree to take part – dispensing free samples of trial lines, offering recipe ideas using Kraft products and driving traffic back to the company's website for further offers.

Intel, which is in advanced talks with Sainsbury's, M&S and Tesco regarding a UK trial later this year, believes that the vast majority of the 500,000-plus vending devices in use in Britain can be recalibrated to carry smart software for less than £1,000 each.

There is a sound practical reason why retailers are so keen to progress from general observation of shopping habits to the particular, as Venugopalan points out: "The truth is that while automatic gender scanning is fairly reliable, age scanning is far more iffy. If you end up insulting someone who looks older than they actually are by suggesting they buy a particular fashion or cosmetics range, they will hardly warm to you."

As arguably the most watched nation in the world, we have long been accustomed to the blink of a CCTV system recording our every move in car parks, streets and stores, but the new application for video surveillance technology is business intelligence, says Jon Cropley, principal analyst at market research firm IMS.

"Video content may be set up to identify individuals spending too long in a particularly vulnerable area such as the back of the store and that information can be invaluable if you are losing millions of pounds each year to shrinkage," he says. While theft by customers and staff remains a thorny issue for all retail businesses, in-store CCTV can also be used to understand shopper behaviour or, in the case of a number of Las Vegas casinos, quickly identify known high-rollers and remind staff to extend a warm welcome to them.

Cropley believes that the use of CCTV may even "improve the overall customer experience for all of us". Using what he calls a "loitering algorithm", a monitoring system can alert staff if a customer is seen spending a disproportionate amount of time at a particular fixture – electronics, say – and can immediately send in expert staff to "help and advise".

Other applications would include identifying the busiest parts of the store, using the resulting data to sell strategic store positions to third parties for higher rates. Stock level and in-house promotion planning would also benefit from such tracking, Cropley believes.

"We are already seeing a lot of interest among High Street food, clothing and electronics retailers who believe that the long-term returns of this kind of shopper surveillance are very attractive," he adds.

CLICKS TO BRICKS
Martin at M Worldwide understands the dynamics of retail layout and the intricacies of so-called power aisles (the prime locations in a store), decompression zones (areas just inside the entrance) and the ways in which companies can capitalise on the fact that 75 per cent of us automatically look right when entering a store.

He believes that while more of the transactional cut- and-thrust of shopping will inevitably happen online in the future, traditional stores still have an important part to play in terms of "retail theatre".

"As the more mundane aspects of shopping are done virtually, often via your phone, aimless aisle-walking past rows and rows of white goods or sofas will become a thing of the past," Martin adds, suggesting that the space currently given over to larger items will be used to stage cookery, DIY or grow-your-own gardening events that
showcase products in the store. "Despite High Street occupancy being at an all-time low and internet shopping growing exponentially, traditional bricks and mortar remain the lifeblood of the retail sector," he explains. "And even the most committed online retailers are turning to traditional environments so they can offer a more rounded experience."

Proof of Martin's clicks-to-bricks argument comes with the announcement by Amazon of its first physical store, in Seattle in the US – selling tablets and readers and, ironically, offering a "hands-on experience of its products". But there are other intriguing approaches, too. Last summer, Tesco Homeplus converted Seoul's Hangangjin metro station into the world's first fully functioning virtual store, boosting its online sales in the country by 130 per cent.

The trial, which involved transforming the walls of the station into virtual displays of products, each with its own scannable (by phone) QR barcode, and which established same-day home delivery as the norm, is now being rolled out at 20 bus stops in the city.
Tesco's international spokesman Ian Hutchins believes a similar move in Britain is possible. "Although no announcement around a UK virtual store experiment is imminent, the extension of our trial in [South] Korea is a clear indication that we see this as a potentially successful business model. In terms of a UK rollout, I certainly wouldn't rule anything out," he says.

If Martin is correct, those of us with smartphones – and the will to use them co-operatively with the retail brands that rank highly in our lives – are already in sight of a retailing revolution.

But even he isn't convinced that the dazzling array of breakthrough technology – including price tags in Brazil that play appropriate music when you try on clothes – is always as significant as some reckon. "I see a lot of gimmickry by companies that have never innovated, never really developed their offer and will continue to trail behind the blue-chip firms whatever technology they employ," he says.

As the patchily applied convergence between online and offline shopping by key names on the High Street continues to both amaze and infuriate us, one thing seems certain. However firmly a store aligns itself to the latest IT wizardry, no amount of smoke and (magic) mirrors will turn a mediocre retail brand into a great one.
And if you really don't want to be scanned, tracked, monitored and addressed by name as you put away your car keys and reach for a trolley, turn off your phone before you enter a store.