A man walks into a Minneapolis-area Target, angry about coupons his teenage daughter received for baby clothes and cribs. “Are you trying to encourage her to get pregnant?” he asks a store manager. Except, his daughter really was pregnant. Target had tuned a marketing-prediction model so tightly that it could successfully tell what was happening inside her body, before even the girl’s family knew.
This story, relayed by Charles Duhigg in The New York Times in 2012, is one of the most famous parables of the internet age, and for good reason—it turns a boring consequence of digital marketing strategy into a whodunit personal-privacy mystery with obvious stakes. It draws people in because it tickles a conspiratorial fear: that thanks to the data we fools share with them, companies can root out our deepest secrets.
But Target didn’t exactly predict that the girl was pregnant, or even really reveal the fact to her father. Sure, the teenager’s secret might have been laid bare, but mostly because she couldn’t deny that Target’s advertising mechanism had made an accurate guess. Target didn’t “predict” anything—the retailer just sent out personalized marketing based on products its algorithms suggested a particular customer might buy. But to consumers unaware that retailers had amassed such a large amount of data about them, it felt like a prediction, as do so many of the other targeted ads a person gets as a result of life lived online. It’s tempting to attribute savvy and even mystical intelligence to consumer data, as if big companies all have Minority Report–style clairvoyants ready to reveal your most sensitive thoughts before you’ve even thought to think them.
The reality is, unfortunately, worse. Retail companies do collect massive volumes of terrifically sensitive data: demographic information, geographic location, websites you’ve visited, brick-and-mortar stores you have patronized, products you own, products you’ve browsed, products you’ve searched for, even products they think you might have looked at but passed over in the store. They do this not only to predict your future behavior, but to influence it.
In marketing, segmentation refers to the process of dividing customers into different groups, in order to make appeals to them based on shared characteristics. Though always somewhat artificial, segments used to correspond with real categories or identities—soccer moms, say, or gamers. Over decades, these segments have become ever smaller and more precise, and now retailers have enough data to create a segment just for you. And not even just for you, but for you right now: They customize marketing messages to unique individuals at distinct moments in time.
You might be thinking, Who cares? If stores can offer the best deals on the most relevant products to me, then let them do it. But you don’t even know which products are relevant anymore. Customizing offerings and prices to ever-smaller segments of customers works; it causes people to alter their shopping behavior to the benefit of the stores and their data-greedy machines. It gives retailers the ability, in other words, to use your private information to separate you from your money. The reason to worry about the erosion of retail privacy isn’t only because stores might discover or reveal your secrets based on the data they collect about you. It’s that they can use that data to influence purchasing so effectively that they’re rewiring your desires.
Up until about a century ago, sellers had that same power, but in a different way. To buy a bag of rice or a bolt of fabric or an automobile, you would haggle. This allowed sellers to maximize profit based on what they thought you might pay; it also allowed them to reward or punish you for appearing to be a certain kind of person (woman, Black man, Jew). And so people bought the goods sellers allowed them to buy.
The department store and the grocery killed that power. Efficiency became more important than maximizing individual sales. John Wanamaker, who supposedly invented the price tag for his eponymous department stores, saw the matter as one of eternal salvation as much as retail equity: If everyone was equal before God, then so too should they be before price.
The University of Pennsylvania communications scholar Joseph Turow calls the shift to fixed pricing, which took hold by the turn of the century, a “democratic era of shopping”—democratic because what people bought got separated from who they were. Identity might influence desire, but everyone ostensibly had access to the same goods at the same prices. Companies had little idea who you were, and they didn’t much care, so long as you bought stuff.
Then all that unraveled, thanks to a once-unknown computer technology that quickly became universal.
You thought I was going to say “the internet,” but you’re getting ahead of yourself. It’s the Universal Product Code, or UPC—the barcode on each bag of Doritos, package of underpants, curtain-rod finial, and almost every other product sold to consumers in stores or online. The first barcoded good, a pack of Juicy Fruit gum, was scanned just after the summer solstice in 1974.
The barcode offered retailers better inventory tracking and more efficient reordering processes. But it also decoupled price from product. Price tags, once affixed to every can of beans, now moved to store shelves and became easier to update. Then stores realized that barcodes could be used to track what customers bought, and to direct their buying behavior.
Thus began the data-collection age of retail. Preferred-customer programs, whose membership cards and tags are scannable just like UPC codes, allowed retailers to connect products purchased to specific individuals. Wanamaker’s logic of one price before God ebbed; instead, loyal customers—which is just to say, those willing to hand over their purchasing data—got preferred prices.
Retailers also realized that data could drive new forms of direct marketing. Stores began extending special offers deemed particularly relevant based on prior patterns. These customized coupons created a murkiness around who got the best deals and why: Being offered a discount on cool-sport-scented deodorant after buying Pepsi Max might represent a keen deduction of a customer’s wants or needs based on data, or it might amount to a random guess. Either way, an individual has been offered a special price on account of who the seller perceives them to be, based on all the relevant data it has managed to suck up. And that suggestion has power: Maybe I am a cool-sport kind of person.
The internet made things much worse. By the time it commercialized in the 1990s, retailers had been collecting, storing, and deploying consumer data for some time. The web promised the holy grail of marketing. In the physical world, marketers can’t tell if that ad you saw on the side of a bus influenced your behavior. But online, they can track you from the moment you see an ad to the moment you buy the product advertised. Retailers began collecting and connecting even more information about their customers. They recorded what you browsed, not just what you bought. They tracked location, via your computer’s network address. They used data breadcrumbs called “cookies” to follow you across many website visits. Later, they used cookies to follow you across the whole internet, too.
Smartphones gave stores even more refined information about their customers, facilitating new kinds of in-store spying that most people probably don’t even know exists. Mousetrap-size radio transmitters called beacons ping off apps on your phone and can track your location down to the inch inside a store, giving retailers granular insight into what types of products you linger over. This information, combined with other data the store has collected itself and bought from third parties, can paint a vivid picture of who you are and what you might be persuaded to buy for what price in the moment: In principle, you can linger over the sugary cereals in the grocery store, opt for the whole grains, and then be served an ad on your phone for 10 percent off Lucky Charms, which the ad may remind you are actually part of a balanced breakfast.
Retailers have also started to test facial- and voice-recognition technologies in stores, giving them yet another way to track customer behavior. In-store Wi-Fi helps with the signal-inhibiting effects of many stores’ concrete-and-steel construction, but it also allows stores to collect your email address and browsing traffic, and in some cases to install cookies on your device that track you long after you leave the store and its network. Store-specific apps offer deals and convenience, but they also collect loads of information via features that allow you to make shopping lists or virtually “try on” clothing or makeup by scanning your likeness. Club cards enable stores to log every item your household purchases and analyze your profile for trends and sales opportunities.
Ordinary people may not realize just how much offline information is collected and aggregated by the shopping industry rather than the tech industry. In fact, the two work together to erode our privacy effectively, discreetly, and thoroughly. Data gleaned from brick-and-mortar retailers get combined with data gleaned from online retailers to build ever-more detailed consumer profiles, with the intention of selling more things, online and in person—and to sell ads to sell those things, a process in which those data meet up with all the other information big Tech companies such as Google and Facebook have on you. “Retailing,” Joe Turow told me, “is the place where a lot of tech gets used and monetized.” The tech industry is largely the ad-tech industry. That makes a lot of data retail data. “There are a lot of companies doing horrendous things with your data, and people use them all the time, because they’re not on the public radar.” The supermarket, in other words, is a panopticon just the same as the social network.
For Turow, that prospect is deeply concerning. Near the end of his book on shopping surveillance, The Aisles Have Eyes, he argues that this trend “is toxic for people’s sense of democratic possibilities in society.” The stratification of customers based on data—that is, based on incursions into their privacy—“encourages abandonment of the historical ideal of egalitarian treatment in the American marketplace.”
That seemed somewhat extreme, so I asked the privacy-law scholar Neil Richards, my colleague at Washington University in St. Louis, what he thought of it. His mantra: “Privacy is about power.” People should care about privacy, Richards argues, not because they do (or don’t!) feel like they have something to hide, but because information alters the power that corporations, governments, and institutions hold over their customers, citizens, and constituents. “Companies want the data because it allows them to anticipate, calculate, and manipulate consumer preferences and buying behavior.”
But come on, does it really count as civic erosion when a company tries to sell you Tide Pods or Wheaties? When I pressed Turow on this claim, he reminded me that Wanamaker’s idea of pricing equality wasn’t rhetoric alone, or just marketing. “What Americans do is, we shop!” Turow said. “So much of our sense of status and self relates to what [people] are able to purchase, how companies look at them.” The goods, services, ideas, and opportunities people can access help form who they are and whom they can become. Consumer desires have always been constructed, in part, by marketers seeking to capitalize on the commercial expression of those desires. But now the desires themselves are manufactured for us, chosen by machines who don’t want us merely to adopt a product or even a lifestyle, but to accept the one assigned to us.
Turow and Richards support regulatory intervention to roll back privacy’s incursion. Turow endorses Apple’s do-not-track app controls, which allow iPhone users to prevent companies from leaking data without their knowledge. He also hopes the Federal Trade Commission will update its long-outmoded understanding of harm, which prevents that agency from intervening in most of the marketing techniques that underlie today’s retail-privacy situation.
Bryan Leach, the CEO of the retail-cashback-rewards company Ibotta, sees things differently. For him, personalization represents not false consciousness but empowerment. “It comes down to time and relevance,” he told me. “In any customer experience, do I value anonymity and uniformity more, or a personalized experience?” The question is rhetorical; for him, of course personalization offers the better path. Turow, meanwhile, sees personalization as a Pollyannaish myth—retailers don’t give you a bespoke experience, but simply segment you into more and more granular categories. Not personalization, but just a new kind of impersonalization.
Ultimately, each view is one side of the same coin: Either shopping amounts to a process of trading personal data for the chance to hand over money for desires chosen on your behalf—or else shopping is the opportunity to exchange personal data for the comfort of never having to ponder your desires, but to accept what is offered by retailers instead.
Consumers may already have split the difference, settling on resignation. Your data—everything you will share, and many things you would rather not—has become the cost of entry into the marketplace. You simply need to hand over the information sellers demand. According to research by Turow and other consumer-marketing experts, you see no other option.
Whether as the erosion of selfhood or as the victory of customization, today’s data-encrusted, privacy-fed daily specials will persist and evolve. Imagine entering a supermarket whose shelves might someday adjust prices dynamically as you traverse the aisles. Perhaps the shelves themselves will vanish, replaced by screens that display, in high resolution, the products a store deems most compatible with your derived needs and desires. Maybe you’d revolt, but probably you’d just check out.