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Retailers Are Interested in, but Wary of, Location-Based Marketing

For retailers considering an investment in emerging technologies, location-based marketing stands out as a key area of interest.

According to an October 2018 survey by RIS News and global research and advisory firm IHL Group, 58% of retailers in North America said that they planned to invest in proximity or location-based marketing in 2019.

But location data also has retailers concerned about consumer privacy. Retail Systems Research (RSR) and mapping software company Esri polled retailers that were headquartered in the US (73%), UK (26%) and Europe (1%) about location-based marketing in January 2019. Of those that RSR considered “high-performing”—defined as having channel sales growth of 4.5% or higher in 2018—85% said that permission-based location tracking was very important.

However, the same poll found that consumer privacy concerns were among the largest barriers to US retailers. In 2019, 59% of respondents said overreaching concerns about consumer privacy was one of the three leading factors that prevented them from implementing location-based initiatives, up from 46% in 2018. (Note: This question was asked of all retailers polled, not just those that have not used location-based marketing.)

Additionally, 49% of retailers said business leaders at their organizations were concerned about the “creepiness” factor in tracking.

While these are relevant concerns to using location-based marketing, many consumers are comfortable with certain types of location tracking if it makes their shopping experience more convenient.

In October 2018, shortly before the RSR survey was conducted, The Manifest polled US smartphone users about location tracking on mobile apps. The majority of respondents (57%) said they were comfortable with apps tracking their location, while just 15% said location tracking made them feel uncomfortable.

Among those who were comfortable letting mobile apps track their location, most respondents said convenience influenced their feelings.

However, in the months since The Manifest poll was conducted, the practice of companies selling location data has come under scrutiny from the press, including investigative pieces from The New York Times and The Boston Globe. In January, Motherboard revealed how mobile carriers T-Mobile, Sprint and AT&T sold their customers’ location data to just about anyone, including bounty hunters. If this negative press stokes concern among consumers, retailers will have to be very careful about how they approach location-based marketing in the future.