Let's say you make a purchase on Amazon. That means Amazon has your exact location and address. They can track your activities using cookies and other identifiers. Google uses Chrome to capture that same information. Now they have all they need to track you, VPN or not.
Google uses Gmail (and the contents of your emails), Chrome and Google+ to obtain your location and personal information. It's even more pervasive than that since Google has partnerships with a huge number of commercially operated web sites. Three of their services are on Digital Home. They are Google Ad Services, Google Analytics and Google.com. They scan and track your posts.
If any personal or location information has ever been entered into Twitter, LinkedIn, Facebook or any other social networking site, they have all they need to track you. They use some of the same information that is used by Google. VPN services don't hide that.
Visit any site that provides location hints, such as a bank or store, and it provides the browser vendor (Google, Apple, Microsoft) with the ability to capture location hints and personal data. A VPN does not prevent this. Google, for one, appears to ignore IP information if other location data is available.