The upsurge in technology has given way to a noticeable change in the retail industry. At first, it seemed that retail would never change, but due to a strong competition given by online stores, they are slowly shifting. They are adopting omnichannel marketing practices to synchronize with the analytical, highly targeted approaches of the online market. One of the interesting practices that are being adopted by the retailers is the use of location analytics. You might be wondering how location analytics can benefit the retail business. Let us walk you through the nitty-gritties.
It is the process to gain insights from the location or geographic component of business data. The business data is often laid out in the geographical information system. In other words, the information portrayed is analyzed and interpreted based on the data collected along with geographical information system. This analytics are beneficial to retail businesses as the spending habits of the customers from different locations can be easily garnered; thus, increasing the sales and customer retention through targeted advertisements.
This data, when placed in the context of big data and other data models, could help the companies in gaining new insights and discovering other trends in retail.
A recent report by IDC states that the revenue for big data worldwide is set to grow from $130.1 billion in 2016 to more than $203 billion in 2020
Over the past few years, with the advancements in big data, the field of location analytics has grown comparatively. This is due to the fact that organizations can seek benefits from the insights provided by location data.
A report published by the MarketsandMarkets, the estimated growth of location analytics market from $8.2 billion in 2016 to $16.3 billion by 2021, at an approximate CAGR of 17.6%.
The technologies used for analyzing the customer location commonly include phone’s GPS, WiFi or most recent one – the Beacons. These technologies require the customers to download and use the retailer’s app. The customers have to grant permission to access their location.
Why has location analytics not seen extensive adoption yet?
There are a lot of obstacles being faced by the retailers while implementing location analytics. The major one is to enable the customers to download and use the retail app.
According to a study by Harvard business review, customers download the retail apps only if they are compelling enough to use within the store.
Let us explain you with an example; Bella Stores developed an app with store-specific navigation. This app has addressed the pain point of the customers – to locate the items without the assistance of store employees.
The retailers can offer special discounts on app purchases, convenient payment options along with various loyalty programs and a good assistance on phone. This could lead customers to download the retailer app.
Why retail industry needs to adopt location analytics?
The factor which has restrained location analytics from becoming popular worldwide is that the computational power required to analyze the location data in real time was not affordable.
With the introduction of GPU based SQL databases like SQream, the efficiency to process and visualize location data by the retailers have increased.
Also, location analytics can be used to make shipping estimates with more accuracy, modify the products details with their availability to different areas, and more.
The retailers can even define heat maps and can identify the regions from where the most expensive products are purchased; thereby, improving the performance, region wise.
Some of you might be wondering, why adopt location analytics now? Well, this is because you have to compete against the two significant giants of the industry like Amazon and other small retailers, where both are adopting the latest technology to gain an extra edge over the other retailers.
And if you won’t adopt, your orders will gradually decrease. Some retailers might be lucky enough to be acquired by someone else.
It is true, there is a continuous competition faced by the brick and mortar businesses from the online stores. In such situation, retailers can gain useful insights from location analytics, which could help them in innovating and improving their services. Further, it could help the retailers in offering their customers a more personalized experience.
Well, the technology to make the user experience personalized is already there in the market and, those, who win will be those who have made their analytics structure before time.
Location Analytics in Action
Many retailers are already using location analytics to improve the customer experience. One major advantage of using data analytics is the heat maps. These heat maps could help retailers have a better idea of the traffic patterns of the customers on an hourly basis or even in real time.
Once it is determined which area is best for your target, you can orient your marketing efforts in a particular region effectively; thereby increasing your sales revenue.
The heat map data is beneficial in a way that it can be used for comparison of various stores and departments. This can eventually optimize the retail experience for a particular customer segment. This information can be very helpful in making a quicker correction, enabling your customers to have a personalized experience.
One of the popular and commonly used tools for location analytics is Esri, which specifically provide Geographic Information System. These tools have helped several retailers to boost their competitive edge, dwindle their operational risks and lower the costs across the boards, reduce environmental impact and more.
For instance, Wendy’s, world’s third largest hamburger chain implemented the location analytics tool to improvise on their services. They were able to easily view sales records and gain useful insights about their customers. They customized the demographics based on the existing restaurants, which helped them in the prediction of the value and risks associated with the new and existing restaurant location.
How Location Analytics can be implemented in retail
Looking at the present scenario, it can be predicted that a number of retailers are expected to install wifi in their stores; thereby focusing on location analytics to make effective marketing decisions. Let us walk you through some of the ways as to how retailers can employ location analytics to personalize their stores
1. Assess Particular region:
By connecting with your customers, you get to know their location behavior. Retailers can analyze the performance of all the areas individually; thereby eliminating or changing the location of the inefficient or less efficient areas. Say, for instance, you found that maximum visitors on your store belong to age group 21 and above. As an inference, you won’t be keeping kids related stuff in your store. Further, it is noticed that the things kept on the top shelf or bottom shelf have a different attractive index. If it is planned in an organized and efficient manner, it will increase time spent in stores and enhance the conversion rate.
2. Enhancing the personalization tinge
Customize the shopping experience for your customers as good as possible. It is generally observed that most of the customers enter a retail store with two important questions in their mind – first, the availability of the product and second, where they can locate it in their stores. This can be very effectively solved, if the customer has the mobile app, where all the information regarding the product can be displayed, including where to locate the product in the store. Your regular customers could help you in customization, building brand awareness and popularizing your store among the others.
3. Simple Navigation:
Retailers can create a shopper-friendly environment in the store similar to the navigation in an online e-commerce store. It is noticed that if a shopper knows where their desired product is located in the store, they are likely to visit the store more often. Moreover, when you know about your customers’ location, you can make instant offers accordingly, with the help of beacon solutions; thus, increasing the basket size of the customers.
4. Bring about a change:
As a popular saying, “Progress is not possible without change”. The retailers must also change their customized patterns in the store, just to check attractiveness of a particular in-store arrangement to increase the sales. By observing the flow of the customers with the help of location analytics, an optimal pattern can be attained.
There is a massive advantage of location tracking. This could be helpful in easily deriving data based on the duration of the customers’ visit, their engagement, their movement in the store, etc. It is better if the customers’ are using the store’s wifi services for real-time assistance, discounts or if they have an existing account associated with their device.
Want to know more about Location Analytics?
Location Analytics can be very beneficial for the retail businesses. Many retailers have been adopting different ways to implement a process to make use of analytics for enhancing the customer engagement and enhancing their overall sale.
We at Multidots can assist you in making the best possible use of Location Analytics in your Retail Business.