Indoor Location Technologies Create CRM Opportunities for Retailers

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Indoor location technologies, which include Bluetooth and Wi-Fi capabilities, will become increasingly important for retailers, according to recent findings from ABI Research.

With in-store app usage remaining below 10 percent for many retailers, the research predicts a shift away from traditional retail apps and indicates that installations of indoor location technologies will reach 200,000 stores by the end of 2016. Moreover, companies such as Apple and Google are exploring indoor location technologies that are handset-based, which would enable retailers to transform the mobile experience in their stores.

According to the research, handset-based indoor location technologies in particular allow retailers to measure marketing campaign performance, streamline in-store processes, create new advertising revenue streams, and improve the overall shopping experience. The technology also enables retailers to scale their stores across a chain and engage with more customers.

Furthermore, according to Patrick Connolly, principal analyst at ABI Research, adopting these technologies will enable retailers to support in-store customer analytics, bring utility to store apps, and potentially increase sales.

“The arrival of handset-based indoor location technologies from Google and Apple will shake up this market significantly,” he tells CRM magazine via email. “Retailers have largely failed miserably with their own apps, offering very little utility and value to the customer. Yet they are thrashing around desperately trying to figure out a mobile strategy, trying to avoid the same mistakes as online.”

Connolly cites Google’s Nearby service, which enables devices to discover and connect with other devices on local networks, as particularly powerful. “The mobile industry is finally finding ways for retailers to reach customers based on proximity and relevance in a way that is far more frictionless than a traditional app,” he says.

Retailers might also look to pair these technologies with popular apps, such as Facebook and WeChat, as opposed to traditional store apps. Using these platforms would remove the need for customers to download and remember additional apps, and immediately deliver store offers and deals to them based on their current locations. Additionally, the technologies present an opportunity to evolve advertising. Connolly suggests that advertisers will pay a premium to deliver hyper-relevant in-aisle ads to consumers, creating a new revenue stream for retailers.

Nevertheless, Connolly points out that the technology has its limitations and risks. While he notes that handset-based indoor location technologies “present a way for the overall industry to scale much more rapidly,” they are still reliant on a fixed infrastructure made up of Bluetooth beacons and Wi-Fi hot spots. Furthermore, he notes that the technologies might present a threat to retailers, as outside developers can build apps based on indoor mapping and location information within the store.

As far as implementation goes, the process is relatively smooth. “Indoor location technology isn’t overly complicated today. IT departments have questioned issues around battery life and management of beacons, but those problems have all started to disappear,” Connolly says.

“A good first step is to begin with analytics, especially if a retailer already has Wi-Fi access points installed. This gives them a very soft entry and a chance to play with the potential of this technology,” he adds. “In-store analytics helps a retailer to get a far better understanding of their customers: who is new/repeat, who browses but rarely buys, who is loyal but doesn’t have a loyalty card. It also helps to improve store layout and understand if advertising campaigns are having an impact at the store level.

“Until now retailers have relied on revenue and, to a lesser extent, footfall data. The industry needs to join the 21st century,” Connolly concludes.

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