Say you’re shopping in this Armani store in Hong Kong.
Then your friend calls. You answer the phone and leave the store.
For Armani, you’re a lost customer.
But then the next day you’re sitting at work, looking at your phone,
and you get an Armani ad reminding you of your visit from yesterday.
Wait, what happened here?
But I didn’t give any information. I didn’t register my name. I didn’t register for an app.
If you have a smartphone, your phone is constantly
sending and collecting different signals, from GPS, wifi and so on.
So we use those signals to understand your location.
That’s Miron Mironiuk.
He started a company called Cosmose, which tracks shoppers offline
and helps stores market to them online.
We don’t need you to install an app. We don’t need you to connect to wifi or bluetooth.
Cosmose is in more than 100,000 stores, in which it can track location-based activity 24/7.
And it's tracked more than one billion smartphones.
It’s so precise, it can narrow down where you stood in a store to about a six-foot radius.
We can tell that someone was trying the makeup, someone was trying the fragrance.
And six feet is really just a few steps.
Yes, maybe just like two steps.
Cosmose doesn’t actually install anything in the store.
But they do need to physically visit, so they can map the space and understand the wifi signals in different areas.
Cosmose is able to know your movements because it buys the data from the apps
that you’ve already given permission to to know your location.
And it’s not hard.
400,000 apps are sharing data with Cosmose,
on average seven apps have permission for location-tracking on a typical smartphone in China.
So a store can now track a phone that was in the fitting room but never made it to the cash register.
Then using anonymous IDs based on your previous locations,
ads are purchased on the likes of Facebook, Google and WeChat.
And that’s how you get those targeted ads.
The ad on your phone could prompt you to buy online or go back to the store.
Your technology can also track if I stood here and then went across the mall to your competitor.
Exactly, exactly.
If I’m a user, I come to a luxury store like this and then go to McDonald's for lunch,
what does your data make of that?
We probably think that you are just window shopping,
maybe you will go online and try to get the same luxury clothes cheaper.
Cosmose is active in China, Japan, Hong Kong and Taiwan.
Their clients include Burberry, L’Oreal and Budweiser,
and Miron says many of his clients want to expand into the U.S. next.
Lubomira Rochet is the Chief Digital Officer for L’Oreal and based in Paris.
The story goes, you visited a store, one of our stores for example,
and then you will receive like the day after in your feed on Facebook or WeChat
an online ad that is super personalized to the experience you just had with the brand
and then encouraging you to go back to the store, in order to buy.
Lubomira says that by doing this, they've seen an increase
in converting offline casual shoppers into actual buyers.
But, this technology of tracking people offline is still in its early days.
Critics might say that this is quite invasive
to track someone offline and then start marketing to them online.
We don’t collect any personal data.
We only analyze groups of anonymized IDs and for sure
this new technology will create new questions but I can assure you that we respect privacy.
In a U.S.-focused report, the New York Times found that at least 75 companies are receiving
anonymous location data from users who have enabled-location services.
Sales of location-targeted advertising is estimated to reach $21 billion this year.
Mark Lunt is a retail expert based in Hong Kong and working with clients across industries in Asia.
He says people are increasingly okay to give up some privacy, in favor of convenience.
That Google knows where you are, where you're going, where you've been,
but the tradeoff is Google maps is a great product.
And it allows me to get from here, to here, it allows me to predict how long it's going to take if I'm in a car.
He refers to it as privacy fatigue, where users become apathetic
to the fact that they're information is being tracked.
Often you look at an app and you think, "why on earth does that app need to have access to my contacts,
to my history, to my shoe size, to everything else that's in there somewhere.
Just think, "Well they probably know it all already, so off we go."
But this is different.
You’re not signing up for an app.
In fact, you’re not really signing up for anything at all.
The technology behind Cosmose is part of a broader trend in retail
that’s bridging the experiences of shopping both online and offline.
Our obsession is to really address the consumer, sometimes he will start offline, sometimes
he would start online, at the end of the day we really want to merge those two worlds.
Each person I talk to for this story, at some point brings up the importance of China.
China really does lead the world, so it's very much a case of, look at what’s happening
in China because it’ll be happening in a shopping mall near you fairly soon.
In 2017, 20 percent of retail sales came from online shopping in China.
Compare that to just 12 percent in the U.S.
And in the four preceding years, China saw a 33 percent growth in online sales penetration,
compared to just 11 percent in the U.S. and 10 percent in the U.K.
Today in China, we don’t say e-commerce and offline or brick-and-mortar, we just say commerce.
American and European companies will find it really hard to compete with Chinese companies,
because the Chinese are just much, much faster and they’re not arrogant.
But China’s advancement isn't just about technology, it also comes down to culture, too.
One would have to say that privacy is much more highly valued by the Europeans than it is by the Chinese.
Over time it's hard to see the barriers to privacy going up, isn't it, from where they are now.
And location tracking through your cell phone might just be the beginning.
Lunt says some businesses are now using facial recognition technology, too.
There’s a number of ways they can identify you as an individual and if they've been tracking
your online behavior they can influence you appropriately when you're in the store.