as Frank said.
Why should you hide what you are doing? Most people don't care, and are flattered. I had one guy give me crap, but he was just "busting my balls." No harm done, and good feelings all around. Just be upfront if someone asks what you are doing.
In a bar one time in my hometown, I was merely checking the exposure through the camera, and a girl asked me if I took her picture in a snarly attitude. While I hadn't snapped a shot, merely checking to see what setting was needed, I felt a bit taken aback. My response might not be recommended - I felt put upon for being made to feel like *I* was the weirdo, and told her as much. She was pretty, and I had thought about asking if I could take a shot or two, but her attitude was a bit over the top. Her friend was at first of like mind, but as soon as I stated my resentment at her trying to make me feel like I was overstepping *my* bounds and trying to make me feel guilty for a totally innocuous gesture, she quickly said she didn't care if someone took her picture when she was out and about in her best dress. It's no different than asking a girl to dance - some get snarly, some are flattered, but at the end of the day it isn't the snarly ones we remember.
There's nothing to be gained by being a doormat. But certainly don't treat your subjects like they are freaks for shopping at a dollar store lol. We are all freaks in our way, and some days are better than others. Treat people with respect and politeness, and take their picture if you wish. If you explain to a person that the shot would look empty and lifeless without them in it, you remove their fear of being singled out, yet flatter them by acknowledging their "belonging," if you will.
I find that it is easier if I pretend everyone I see is a friend of a friend, someone I might enjoy getting to know on some other occasion. As such, don't make a poor first impression.
If you constantly act like a *supreme* tourist by pretending to take a picture of everything, people very quickly ignore you. It's when you stop out of the blue and bring the camera up focused on one person that people get nervous. It's probably just an instinctual defensive reation more than a real aversion to photographs, but have compassion for the woman running to the store for diapers in a housecoat and flipflops - it isn't her finest moment, and how would you feel being immortalized in that situation? In public or not, people have dignity. Try to respect that, and you'll be fine.