EXCLUSIVE: US retail giant Target pioneers 'spy lights' that track customers via their smartphones

American retail giant Target, a self-confessed long-time technology laggard, is now on a mission to catapult itself to the digital vanguard both inside and outside its shops. Top of its list: an in-store mobile phone navigation system that guides customers around cavernous floors using what could become the hottest information delivery vehicle in brick-and-mortar shopping since the barcode – lights.

Lux has learned that a technology called visible light communication (VLC) is almost certainly a key component of what $73 billion Target is trumpeting as its new, customer friendly, transformative, 'mobile in-store experience'.

A bouncy promotional video on Target's website shows a happy, confident, digitally-enabled young shopper entering a Target store where her smartphone – for much of the time mounted on her shopping trolley facing up toward the lights – welcomes her with a free cup of Starbucks coffee, shows her the fastest route to the Tide laundry detergents, and sends her comparison information on a variety of soaps once she gets there. At the end of her efficient but jaunty journey, the phone and its app help her to pay at the checkout, assuring the smile remains on her face.

The video makes no mention of lighting technology (although you don't have to look hard to see omnipresent lights looming over her shoulder throughout the reel), and Target would not confirm that the in-store system is based on lighting.

The retailer referred technical queries to the system's provider, Bellevue, Washington-based integrator Point Inside, which offers in-store navigation and location technology called StoreMode.

See the light:  The  front-facing camera on this shopper's smartphone is picking up data from the LED lights in the ceiling

'Target has integrated our StoreMode platform into their mobile app,' a Point Inside spokesperson said. 'The StoreMode platform supports a range of indoor location solutions that augment our core product location services. These include beacons, Wi-Fi, mobile phone sensors, lighting technology, and other emerging technology. We can't comment on the specific elements or technology that are included in our partner implementations.'

Point Inside stopped short of specifically saying that Target has tapped the lighting capability. In response to a general question about lighting-linked systems, the company said: 'At the moment, we aren't working with many retailers who use this type of indoor location.' She declined to confirm whether Target is one of the few who are using it.

 

Getting in position

The technology is believed to be VLC, a fledgling tool that some industry pundits say will become an invaluable means for retailers to engage customers. VLC has many possible applications (including the creation of light-based alternatives to Wi-Fi networks) but the one expected to take off first is 'indoor positioning', in which LED luminaires pinpoint a smartphone's exact location in a store so that retailers can send shoppers information on nearby products. With the ability to locate a phone to within about 10 centimetres, it's way more accurate than GPS, and allows retailers to determine exactly what display a shopper has paused at. And unlike GPS, it has no problem working indoors.

VLC takes advantage of the fact that LED lights actually flash on and off constantly, but much too fast for the human eye to see. It tweaks the frequency at which the lights flicker, allowing data to be encoded like morse code. It's the same way a remote control sends a signal to a TV, but using visible light instead of infrared. All this is imperceptible to the human eye -– the lights just continue to shine as normal – but it can be picked up by the built-in camera of a computer or smartphone. An app on the phone can then use the data to pinpoint its position in a store.

The technology is a potentially excellent fit with retail infrastructure, because all stores have lights. Thus, the same modern LED technology known for slashing energy consumption and maintenance costs can now play an integral role in information technology undertakings – the same concept that is beginning to drive the deployment of intelligent, internet-connected LED streetlighting in cities like Los Angeles.

Suppliers of VLC include US firms GE, Acuity, specialist ByteLight, and Scottish startup PureVLC. GE has been partnering with ByteLight, although that relationship will most likely change with the acquisition of ByteLight this week by Acuity, which itself has partnered with Qualcomm on VLC. Ligthing giant Philips has also championed the technology.

 

Starting small

It is not clear how many of Target's nearly 1,800 stores use VLC. The number is believed to be small, but is expected to grow this year. Minneapolis-based Target declined an interview.

Light's eye view:  This is what the data-transmitting LED lights see

At Target's recent corporate analyst meeting, the company's chief strategy and innovation officer Casey Carl described the in-store system as part of an overarching plan to embrace digital technology and the 'internet of things' so that customers – Target calls them 'guests' – can shop, buy or browse from home, remotely or in-store via digital devices.

The scheme puts a heavy emphasis on mobile phones – which Target says nearly all of its customer use to shop – and on making shopping easier.

'We've seen nothing short of explosive growth in mobile,' Carl said at the analyst meeting. 'If you look at our guests and how they want to shop, mobile is truly the new front door to Target. Now, this is a staggering statistic. Ninety eight per cent of Target guests shop digitally, and the vast majority of that shopping occurs using a mobile device. From a routine trip for groceries to creating a wedding registry, almost everything begins on mobile. Last year mobile traffic grew 44 per cent and conversions shot up sixty nine per cent.'

 

Mobile mobile everywhere

The in-store navigation system marks an ambitious attempt to extend Target's mobile offering.

'We're going to continue to improve on the mobile experience in a number of ways this year – evolving the user experience by improving our in-store location and navigation capabilities, greater mobile payments integration, and testing new technologies like iBeacons to make shopping even more personalised,' Carl said. He did not refer to lighting technology. (iBeacons are Apple's version of a technology called beacons, which transmit data using a low energy bluetooth technology. They are typically used indoors where erratic mobile signals can undermine traditional GPS location methods.)

Target chairman and CEO Brian Cornell was similarly imbued with the spirit of smartphoneism.

'We will be a brand that separates itself from others based on merchandising authority and experience, centered on ease and on inspiration,' he told analysts. 'We'll enable mobile to be the front door to all of Target. Importantly, we'll reassert our cultural leadership to build unparalleled guest affinity. And we will be a more agile, a more efficient, and a more guest-focused headquarter team.'

 

Reversal of fortune?

The company's born-again technology movement marks an attempt to reverse years of digital dawdling, according to Target executives.

'As consumers rapidly embraced digital, we reacted too slowly,' Carl said. 'We played catch-up, and we treated the businesses separately, while competitors who doubled down their investments and moved to integrate their organisations grabbed market share... We learned a lot, and we will not be caught flat-footed again.'

Target has been on the financial mend over the last couple of years. Its troubles have included a massive breach of credit card data in 2013, for which it ended up paying $19 million (£13 million) as a settlement to credit companies. In 2013 sales dropped by 0.9 percent and it suffered a slump in same-store sales for four consecutive quarters until it reported a rise in November last year.

 

Blurring the line between digital and physical

Digital sales grew 30 per cent and accounted for 0.9 per cent of the comparable growth in 2014. They are expected to outpace sales growth in physical stores, although Target has now intentionally combined digital and physcial world sales into one 'single-segment' business.

'Many of you ask us to isolate the economics of our digital business,' chief financial officer John Mulligan said at the annual analyst meeting. 'It's a natural question, because we have some online-only competitors and some other brick-and-mortar competitors who treat the digital channel as a distinct business.

'However, given our operating model and our strategic plans, we don't think of our digital channel a separate. At the highest level our goal is to grow both top line and the bottom line by creating profitable retail relationships with guests, and we are agnostic to the channel in which a guest chooses to interact with our brand.'

The VLC-linked 'mobile in-store experience' puts teeth into that combined digital/physical approach. For instance, shoppers who arrive at a store with shopping lists and product information already prepared on their Target app can then tie into the navigation sytem to find their items.

 

Anything that can be digitised, will be

Target is also developing other digital technologies that link into a user's app, such as the 'Zero Click' programme in which intelligent sensors note when someone is running low on a product like nappies (diapers) and prompts the customer accordingly. 

To hasten development of all of these technologies (perhaps including addressing privacy protection, an issue sure to arise), it created a new 'transformation office' last year, headed by Carl. It hired a new chief information officer, Mike McNamara, formerly of UK retail giant Tesco (which has had its own share of setbacks in recent years).

'We have been aggressively hiring data scientists, engineers, product managers, and visual merchandisers,' Carl noted.

That crop of new hires almost certainly includes lighting engineers, whose job description will go well beyond simply illuminating the shop floors. Light for light's sake? That's so last year. Next time you walk in as a Target 'guest', you might not know it, but they could be welcoming you to the era of converged lighting and data.

 

  • Lux will be holding a Connected Lighting in Retail Conference at the Cavendish Centre in central London on Wednesday 27 September 2017 . The event will consider how connected lighting can be utilised to interact with shoppers and what new technologies are best suited to this task. The conference will also advise you on the best ways to become a player in this exciting emerging market. You find out more and register to attend by clicking here.

 

 

 

 

UPDATE: This article was amended on 27 April to say that Point Inside did not outright confirm that lighting is part of the StoreMode system at Target, but that StoreMode, which Target uses, can indeed support lighting. We also added a quote from Point Inside indicating that some of Point Inside's retail customers leverage the lighting aspect.

 

Images are screengrabs from Target's video

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