Facial recognition technology presents opportunity for retail

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If facial recognition technology can do so many good things, why are so many people concerned by its use in retail stores?

“There are activists to protest on everything,” says Read Hayes, research scientist at the University of Florida and director of the Loss Prevention Research Council, saying there could be a misunderstanding of the way the technology is being used. “Just because a person is subject to recognition by the technology does not mean they are subject to immediate arrest.”

PERSONALIZATION POTENTIAL

Many retailers aren’t saying much about recognition technology, worried that those misunderstandings will provide a backlash.

At the other end of the retail spectrum is Meridian, Idaho-based Jacksons Food Stores, a 215-unit convenience store chain. A Portland, Ore., location greets potential shoppers at the door with a sign that instructs: “Look at camera for entry. Facial recognition in use.”

The same technology that can recognize both known thieves and loyal customers can also be used for beauty applications that require fine gradations in skin tone and hair color.

But even while being open about its use, Jacksons recognizes the concerns about the technology. “We are in the early stages of testing new technology that utilizes facial recognition software,” the company said in a statement when asked to comment. “This particular solution has shown to significantly reduce incidences of crime for other similar retailers. That said, no solution is perfect, and we acknowledge public apprehension behind facial recognition software.”

The technology is not solely about loss prevention — there are many proactive uses, particularly when combined with other technologies such as artificial intelligence and augmented reality. When facial recognition identifies an individual, Hayes says retailers might “call 911” — or they might “give them the VIP treatment.”

In fact, facial recognition technology can be an important part of retailers’ personalization initiatives, argues a white paper from McKinsey & Co.

“Fewer than 10 percent of the companies we surveyed currently deploy personalization beyond digital channels in a systematic way. That presents a big zone of opportunity. One area where the implications could be significant is in store visits,” says Julien Boudet, a partner in McKinsey’s Los Angeles office and lead author of the paper, “The Future of Personalization — and How to Get Ready for It.”

“Our survey data suggests ‘offline’ person-to-person experiences will be the next horizon for personalization. Some 44 percent of CMOs say frontline employees will rely on insights from advanced analytics to provide a personalized offering, 40 percent say personal shoppers will use AI-enabled tools to improve service and 37 percent say facial recognition, location recognition and biometric sensors will become more widely used.”

BEAUTY APPLICATIONS

In June, a day-long event called the Global Beauty Tech Forum brought together beauty retailers and beauty brands to discuss how they use facial recognition and allied technology to enhance customer experiences.

Cyberlink demonstrated its FaceMe system at the event. “It has an accuracy rate of 98.41 percent,” says Richard Carriere, senior vice president of global marketing for Cyberlink.

The same technology that can recognize both known thieves and loyal customers can also be used for beauty applications that require fine gradations in skin tone and hair color, Carriere says. The major difference is that the digital points of recognition are more numerous in such specialized use than for merely picking faces out of a crowd.

Facial recognition is also turning up at shopping centers to take note of regular visitors and the stores where they shop.

“The objective is to make sure you provide better service and support, not to violate people’s privacy. It’s the No. 1 thing you don’t want to cross,” says Sandy Sigal, chief executive officer of NewMark Merrill, which owns 80 shopping centers in Illinois, Colorado and California.

“We definitely at the minimum want features that accurately identify who your customers are, where in the shopping center they go and how long they spend there.”

One of the most widespread uses of facial recognition technology is Apple’s system designed to unlock its mobile devices. The biometric authentication tool can also be used for making payments and accessing sensitive information.

“I’m a big believer in ‘convenience beats privacy,’” says Kai-shing Tao, head of Remark Holdings, an AI and facial recognition developer. Though casinos and banks are major users of facial recognition technology, Tao says it is being tested by some fast food restaurants around the country.

In those tests, customers are asked if facial recognition may be used and their images stored. In return, the individuals receive personalized menu offerings and faster payment options.

CHINA’S APPLICATION

The use of facial recognition is widespread in China, where it has come under criticism for privacy issues. What has drawn less attention is the fact that it has been rolled out to Chinese pharmacies, supermarkets and restaurants, among other venues. And many of those retailers use the technology to identify and contact consumers to enroll them in customer loyalty programs.

The largest use in China is in payments, with retailers coaxing customers away from payment by smartphone to paying simply by looking into screens. Payment by facial recognition was introduced in China late last year and has already rolled past traditional retailers to hospitals and even vending machines.

“In China, facial recognition has developed into a fairly mature state and will likely be adapted as a standard feature for cashless transactions in the future,” says Zheng Qingzheng, an analyst with Suning Financial Research Institute.

As the technology generates increasing conversation, it is also drawing attention from lawmakers. There are no federal laws on it yet but three states — Illinois, Texas and Washington — have laws addressing biometric identification, including facial recognition to some extent. This spring, San Francisco became the first city in the country to ban facial recognition technology, although only by municipal agencies: The law did not address its use by other government agencies or the private sector. The Boston suburb of Somerville, Mass., has also banned the use of the technology by city government agencies.

With several states and Congress considering a variety of privacy bills, it is possible that facial recognition will come up, if not as legislation of its own, then as part of a broader privacy measure. The retail industry is watching the issue closely to ensure that legislation and regulations do not prevent the legitimate, beneficial use of facial recognition either for loss prevention or improved customer service.

David P. Schulz has been writing for STORES since 1982 and is the author of several non-fiction books.

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