Big Retailer is watching you: stores seek to match online savvy

* Face scans, heat sensors, phone signals used to trackshopper

* Smart data allows stores to copy e-commercepersonalisation

* Store wi-fi can track shopper within three metres

* U.S. data firms agree privacy code of conduct

* Mobile ad spending seen tripling to $39 bln in 2018

By Emma Thomasson, European Retail Correspondent

BERLIN, Nov 15 (Reuters) - The next time you walk into ashop, consider this:

You may not be using your phone, but it is giving out aunique signal that the retailer may be monitoring. A facescanner may check your age and gender while sensors pick up yourbody heat to help locate popular parts of the store.

Consumers have become used to players like Amazon closely following their shopping habits online, triggeringtargeted product recommendations, advertising and offers.

To counter the online threat, bricks and mortar retailersare playing catch-up, using increasingly sophisticatedtechnology to improve staffing, layout and marketing.

Some people are less comfortable being watched in theoffline world, prompting many in the business to promise to useonly anonymised and aggregated data unless shoppers explicitlygive their permission to be tracked.

But as retailers get more sophisticated and link the datathey collect to loyalty card schemes, shoppers are starting tosign up to schemes that follow their movements in return fortargeted discounts and apps that help them find products.

German fashion house Hugo Boss is using heatsensors to help place premium products. Luxury chocolate storeGodiva has installed meters to count shoppers so it can matchstaffing to peak hours and measure the draw of window displays.

"Our customers are trying to run their stores or malls moreefficiently," said Bill McCarthy, Europe and Middle East head ofShopperTrak, the U.S. firm behind the Godiva counters.

"They are just trying to get real smart with data in the waythe e-commerce guys are smart with data," he said.

The Chicago-based company says its counters, while not a newidea, helped Godiva's store in London's Regent Street improvecustomer service and hone its window displays, boostingtransactions by 10 percent in six weeks.

CONSUMER CONSENT?

As retailers seek ever more information, ShopperTrak hasbeen investing in high-tech video and phone tracking systems toanalyse how customers and staff behave inside a store.

"The information that we collect is strictly anonymous. Wemake extra efforts to ensure we keep nothing that is potentiallypersonally identifiable," McCarthy said.

Tesco, the world's third biggest retailer, drewcriticism from British privacy groups earlier this month withplans to scan the faces of queuing customers to determine theirgender and rough age to better target adverts.

The company, which put the tracking of customer behaviour ona whole new level with its Clubcard loyalty card two decadesago, said it would not record images or store personal data.

Its advisers say some other retailers are less responsible.

"Too much is happening without consumer consent," said SimonHay, chief executive of Dunnhumby, the customer science companyowned by Tesco that is behind its loyalty scheme.

"You have to be transparent with data, tell people whatyou're doing with it and why and give them something in return."

That has long been the philosophy behind loyalty schemes,which are getting ever smarter as retailers link data from moresources. British shoppers now access an average of six loyaltyschemes via their mobile devices compared to four in theirwallets, a survey by mobile payments firm CloudZync showed.

Even if a customer does not use their smartphone while in astore, retailers can already deploy wi-fi signals to track theirlocation to within three metres, said Darren Vengroff, chiefscientist at U.S. data company RichRelevance.

"Every retailer wants to better understand their customer,"said Vengroff, previously the principal engineer at Amazon whohelps clients like Wal-Mart, Sears and Marks andSpencer provide more targeted offers to shoppers.

"The challenge is to make it really personal and not just abunch of technology like 'Big Brother' watching you and'Minority Report' as you're walking down the street."

If a retailer identifies that a high-value shopper has justentered the store by their phone signal, it would be betteradvised to get a member of staff to give them extra attentionrather than bombard them with text messages, Vengroff said.

Last month, a group of U.S. companies specialising inlocation data for retailers agreed to a privacy code of conductwhich includes signs posted in store to alert shoppers to theuse of tracking technology and instructions for how to opt out.

"Even in an anonymous state, you can begin to pull togethera profile of a customer, when they are coming to store, whenthey are mobile," said John Sheldon, global head of strategy atconsultants eBay Enterprise.

"These are early days for these capabilities," Sheldon said,adding he expects the advent of wearable computing devices suchas Google Glass to accelerate the trend towards morelocation-based tools to navigate shoppers towards deals.

Telecoms group Telefonica, owner of the O2 brand inBritain and other European markets, dropped plans last year tosell location data it collects from its mobile phone customersto German retailers due to a backlash over privacy concerns.

But it proceeded elsewhere, saying it gains insights onlyfrom aggregated data and does not sell personal information.

Telefonica helped Britain's No. 4 grocer Wm Morrison hone its marketing by using phone data to analyse how farpotential shoppers would be prepared to travel to a store. Thatallowed it to target coupons to more households, driving a 150percent increase in new or reactivated customers.

MORE TARGETED, LESS ANNOYING

Many consumers are already shrugging off privacy concernsand embracing tracking technology: European retail consultancyJupiter has seen a 90 percent opt-in rate for a platform whichoffers marketing and mobile payments on smartphones.

"Messages are less and less likely to be annoying becausethey will become more and more targeted as you interact," saidRobin Bevan, Javelin director of location and analytics.

"The system is self learning: it tests the response rate toensure that people don't get messages that aren't relevant."

The software is proving popular even in Germany, where dataprivacy is tightly controlled. Airline Lufthansa hasintegrated it into its "Miles & More" loyalty app, signing upmore than 400,000 users since its launch in 2010.

On Valentine's Day, Lufthansa offered male app users aged20-50 in Frankfurt airport a 20 percent discount at jewellerSwarowski. It was redeemed by 30 percent of those targeted, amuch higher redemption rate than for normal promotions.

Sian Rowlands, an analyst at consultancy Juniper, sees thetrend towards such promotions helping triple global spending onmobile advertising to $39 billion in 2018 from $13 billion now.

"At the moment, mobile users frequently see irrelevantadverts which are infringing on their mobile experience," shesaid. "Being able to target a user whilst they are out shoppingversus at home has a greater impact."

The ability to track customers on their smartphones in thevicinity of a store should help "bricks and mortar" retailersfend off the online threat in other ways too, says Dan Wagner,head of e-commerce and mobile payment firm Powa Technologies.

"Geolocation is what is going to transform the leverage thata physical retailer has versus an online retailer," he said.

"If I transmit my location to the retailer, they could say Ihave a store 300 yards away. You could drop by in half an hourand I'll have your goods for you. Amazon can't do that."