Target, the nation's second-largest discount chain, is testing beacon technology in 50 of its stores.
The retailer joins a growing number of retailers that hope to attract customers with timely deals sent to their smartphones and smartwatches on products based on their location.
Growth in the use of beacons with mobile devices is seen by retailers as a way to improve customer loyalty and, ultimately, sales.
At the same time, use of beacons worries privacy experts, who say that too much personal data is being collected and stored by retailers or third parties. That data, they said, could become vulnerable to hackers.
"Many people are not concerned about the personal tracking data being acquired everywhere we go," said Jack Gold, an analyst at J. Gold Associates. "Many of us have become numb to all the data gathered about us, and it gets worse every day."
The use of beacons will only add to the growing pool of personal data available to hackers, analysts said.
"The privacy issue is a key issue for consumers," Gold added. "What if you are in the birth control section of the pharmacy or looking for hair dye?" That's the kind of personal data that could prove embarrassing or even harmful if somehow hacked and made available to an employer, insurance company or others.
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The primary focus of Target's announcement Wednesday was on ways that customers can improve their in-store experience by connecting to the egg-sized beacons that are spread around the store. The beacons use Bluetooth technology to connect to the customer's device via an updated Target app. The app is available now for iPhones and is coming soon to Android devices.
The app comes with a "Target Run" home page, which acts like a social media site's newsfeed to provide updated product recommendations or coupons based on a customer's location.
Use of the app, including opt-in tracking of a user's location inside its stores and elsewhere, implies consent to allow Target to use personal information that it says "may" be shared with third parties, such as companies outside of Target, for their marketing purposes directed at the app user.
When a user turns on location sharing in the app, Target will use GPS and Wi-Fi outside its stores and beacons and Bluetooth, LED light chip and other technologies inside its store that "permit Target to do things like find nearby products for you, get you real-time deals and auto-sort your shopping list."
The policy also describes various opt-out capabilities in the app, including to opt-out of geo-location and in-store location. There's also the ability to uninstall the entire app, but Target notes that if a user uninstalls the app, the Target unique identifier associated with the user's device will still be stored. If the user re-installs the app on the same device, Target will be able to re-associate the identifier with previous transactions.
Target also says it will retain a customer's information as long as the application is in use "and for a reasonable time thereafter."
Reality check: Are beacons vulnerable to attack?
It is highly unlikely beacons will be hacked directly, any more than individual smartphones or smartwatches, analysts say. The main concern about data gathered by retailers through beacons or directly from smartphone apps is that the data will be stored by various parties on servers that are then vulnerable to attack.
To limit the risk of hacks, privacy advocates say it is important for consumers to be able to track how their data is shared or sold to other parties. Consumers also should be able to delete their own data.
A growing number of privacy advocates also say it's time to consider legislation that gives a user the right to demand deletion of all of his or her personal data from a company's data store and that of its third-party partners. Target partly meets one important criteria asserted by privacy advocate Irina Raicu, director of Internet ethics at the Markkula Center for Applied Ethics at Santa Clara University. Raicu believes that users deserve clear information about how their personal information will be used, and Target does at least provide an outline for how personal data is used.
Even so, analysts said there is widespread apathy about the risks of sharing of personal information. Granting a retailer or app developer the right to know your location and other personal information is "really scary," IDC analyst Ramon Llamas said recently. "It's incredibly problematic."
The apathy comes partly because users don't see a potential risk and want to reap the rewards of obtaining in-store coupons or special offers. "It's about risk versus reward," Gold said. "It's what you get in return for exposing yourself to the data miners."