The science of habit formation, and the looming retail arms race

Retailers are watching you more closely than before. With analytics abilities developed in university labs, stores can now know when you're pregnant -- long before you ever show the bump.
Written by Andrew Nusca, Contributor

They're watching you. And waiting.

That's the crux of a New York Times Magazine piece, published today, about the incredible scientific research and development backing the pursuit of more finely-tuned retail intelligence.

In it, big box retailer Target works to bring cutting-edge analytics to predict peoples' behavior -- such as for a major life event, e.g. having a baby -- in an attempt to gain early access to a potential new customer.

It's a matter of gaining a competitive edge, Charles Duhigg writes. In the case of having a baby, the data helps Target strike when a soon-to-be-parent's ingrained shopping habits are least stable:

Because birth records are usually public, the moment a couple have a new baby, they are almost instantaneously barraged with offers and incentives and advertisements from all sorts of companies. Which means that the key is to reach them earlier, before any other retailers know a baby is on the way. Specifically, the marketers said they wanted to send specially designed ads to women in their second trimester.

Retailers have long collected oodles of information on customers, but most of that is once that relationship has already begun. The potential customer? Well, that's going to require some predictive abilities.

Scientists at the Massachusetts Institute of Technology and elsewhere are already working to fully understand decision-making, from basic evaluation to semi-automatic activity (we know it as "habits"), on a molecular level.

Now, retailers are discovering that such esoteric research could give them an edge, avoid marketing missteps and hone in on what really makes people tick in an effort to be there when it's most relevant.

In the case of the expecting woman, a distinct purchasing trail of otherwise innocuous items reveals, strongly, at what's to come.

Duhigg, again:

Take a fictional Target shopper named Jenny Ward, who is 23, lives in Atlanta and in March bought cocoa-butter lotion, a purse large enough to double as a diaper bag, zinc and magnesium supplements and a bright blue rug. There's, say, an 87 percent chance that she’s pregnant and that her delivery date is sometime in late August.

At a big box retailer like Target, that data can help the company steer customers to parts of the store they never went before, with a trail of coupons and offers that, over time, reinforce the notion that the customer can find all those products at Target -- no need to shop elsewhere.

It's a brilliant article, and the perfect intersection of science, data insights and business. In other words, everything we love here at SmartPlanet.

How Companies Learn Your Secrets [New York Times]

Photo: Hawkins/Flickr

This post was originally published on Smartplanet.com

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