Every day, retailers watch customers leave their stores without making a purchase. For most of these companies, these empty-handed departures are a missed opportunity, and one that isn’t likely to be reclaimed.
But for innovative brands, these walkouts aren’t the end of the road. Consider the customer who leaves a retail clothing store outfitted with technology that tracked her entire visit. She may not have made a purchase, but the retailer has collected data that can be linked to that specific user—possibly through the brand’s retail app that shares location analytics data from her phone.
Even after she leaves the store, this retailer can display an ad related to products that are likely to match her interests, as well as dangling a promotional offer if she changes her mind and decides to purchase either in-store or online. This technology extends the sales window and recaptures sales that, for other stores, would be lost—likely to the competition.
The scenario above isn’t science fiction. In fact, it’s been ripped straight from the in-store strategy of Banana Republic, which has invested in a location data infrastructure capable of retargeting consumers outside of the store. This is just one way retailers are leveraging location information to build more value for their brick-and-mortar stores at a time when many stores are struggling to stay afloat. Increased online shopping has taken a bite out of annual sales, and consumers’ motivations for visiting stores involve more than simply that brand’s product offerings.
Image attribution: Gustavo Devito
Retailers are in the middle of a period of heavy transformation, and the role of location data only continues to grow. But the leading retailers aren’t just blindly adding tech to their stores—rather, they’re using digital assets to enhance the experience and value of their physical locations.
Location data in stores has long been associated with GPS and beacon technology. But new generations of location-based technologies are moving beyond those limitations to generate next-level insights and experiences.
The big question is what retailers can do once the customer gets inside. The typical use case is providing a coupon or another value-added message, but retailers also use this data to inform their clienteling. When you walk into Nordstrom’s, for instance, a retail associate knows it.
Unique identifiers (UIDs) make it possible to create a dramatically improved customer experience. A UID could, for example, notify a drive-through pharmacy of the customers waiting in line for service, giving technicians a head start in preparing their orders. This speeds up the pharmacy check-out process, making customers happier and increasing the department’s productivity.
Meanwhile, this pool of new customer data is rich with insights, which gives retail marketing teams access to unprecedented opportunities to build personalized experiences and engage with shoppers both in the store and out in the world. This increase in engagement is generating real sales results. According to Rob Murphy, VP of marketing at Swirl, a leading indoor mobile marketing software provider, retailers who use indoor mobile location technology are seeing upwards of 20% increases in in-store purchase rate and conversion rate of mall to store traffic, with ROI running as high as five to seven times the technology investment.
Just as the world of digital commerce has greatly benefited from leveraging data and analytics, real-world commerce can’t afford to ignore these insight-rich resources. Oddly, though, there’s a double standard among some retailers when it comes to using this data. An article in the Harvard Business Review points out that while retailers have been eager to apply analytics to online venues, they haven’t had the same level of enthusiasm for real-world experiences.
Some of this apprehension could be tied to fears of consumer backlash. Privacy concerns do tend to be heightened with data collection and tracking of behaviors in the physical world, and a lack of familiarity with the technologies may give some consumers pause—even if they’re likely to embrace the tracking down the line. The level of concern appears for now to be split along generational lines, with millennials more willing to give up their information as long as they get something in return.
Providing clear value is the easiest way to assuage these fears, and some companies have built a reputation on doing exactly that. Walgreen’s has long been a pioneer of location analytics technologies as a tool for driving in-store experiences. If you walk into a Walgreen’s with the company’s mobile app permissions all enabled, you get a message upon entering the store, as well as shopping tips and notifications of certain deals. This in-store interaction offers great value: It can help consumers find what they’re looking for and even save money in the process.
Image attribution: Tech.Co
The beauty retailer Ulta has become the model for leveraging data to keep its brick-and-mortar stores relevant and prosperous. Through a rewards program and a strong omnichannel experience, the brand collects massive amounts of user data to create personalized experiences both online and in-store. These stores are where the company leverages physical space to drive real-world experiences that deepen the relationship with consumers. Ulta sees location as a major asset for its brand goals, which is why the company has plans to open 100 new stores in the upcoming year—and it’s why the beauty retailer’s annual growth continues to outpace Amazon.
In their efforts to interact with physical shoppers, brands have to strike the right balance between regular communications and activity that could serve to push consumers away. Over-messaging is one of the easiest ways retailers can sabotage their own efforts.
Imagine that you go to a mall and a retailer has a location-enabled signal. You could get a message when you walk into the mall, then another in the store, then two more as you move throughout the store. What’s more, a lot of email platforms have a push notification, so you could also get an email message. At that point, plenty of customers would be frustrated enough to delete the apps.
The solution is to tie the UID across the entire omnichannel experience, creating a system that manages the frequency of messages so that your multifaceted approach doesn’t overwhelm consumers. At a certain point, this over-messaging stops feeling personalized and instead begins to feel like incessant pestering—which doesn’t elevate the customer experience. This speaks to the importance of ensuring that technology and data are being leveraged to create not just a new feature or mode of engagement, but increased value with every new interaction.
Through leading retailers and emerging technologies, brands have a blueprint for leveraging location data to drive next-generation retail marketing strategies. The larger question is whether location data is the key to reversing retailers’ brick-and-mortar fortunes. Even if it doesn’t solve all of retail’s problems, the evidence behind location data is strong enough that the mainstream is finally buying in. Time will tell if they can transform fast enough to stay competitive in the ever-changing retail landscape.
Featured image attribution: Heidi Sandstrom