How Location Data Can Revolutionize Retail
Understanding consumers has always been vital to striking a balance of both online and offline customer experiences. However, as we dive deeper into the digital age, where mobile and sensor data continues to multiply, the power of that data goes beyond tracking customer preferences and promises to change the way we do business. The retail industry has been collecting location data to better understand their customers for years, but factoring in details such as traffic patterns, logistics routes and proximity can present opportunities for retailers to not only create quality customer experiences, but mitigate organizational risk, increase efficiencies, boost foot traffic and more. Harnessing location data to distill business insights is a methodology called location intelligence (LI), and it demonstrates that the retail industry is just scratching the surface of what’s possible with location-specific analysis.
Modern applications of LI require advanced spatial analytics and the ability to understand data within socioeconomic and geographic context. However, according to a recent study, just 39 percent of executives say their business performs spatial analysis, and just 27 percent said they use any kind of custom geography. These levels of granularity, if harnessed properly, have the ability to radically change the way retailers do site planning, indoor mapping and geomarketing.
Many retailers struggle to strike the perfect balance between e-commerce and brick-and-mortar investment, but creating a profitable offline footprint is just as critical as creating a positive customer experience online. Insights drawn from spatial data empower decision makers to better understand which neighborhoods reach target audiences while informing whether a store should close or be repurposed as a showroom-style shop. Businesses can use these insights to maximize their investments by placing stores and distribution centers in locations that make the most sense for their clients, customers and sales reps. Factors such as how far potential customers are willing to travel for a product or service and what routes are most cost and resource efficient all help paint a more complete picture of the benefits or risks associated with opening retail stores in any given location.
Retailers have a major opportunity to gain insights on customer and consumption patterns, but are also faced with the challenge of gaining greater granularity, accuracy and reliability for tracking activity within buildings to do so. Location intelligence can positively and proactively inform indoor mapping, making it possible to develop tools like searchable store maps to make the in-store experience virtually effortless for consumers. Additionally, retailers now have the opportunity to generate closer relationships with their customers through geofenced promotions. Like the time American Eagle sent customers who entered a geofenced outlet mall parking lot notifications and promotions, resulting in triple the amount of purchases.The result is the ability to establish traffic patterns and use incentives that help turn “browsers” into buyers, maximize the utilization of the space inside of the store, and improve customer experience and operational efficiency.
Historically, pieces of LI have played a role in marketing for tracking a customer’s physical and demographic data through methods like exit surveys and loyalty programs.Today, there's a greater potential for more sophisticated analytics by layering location analytics on top of classic data collection tools and strategies.
With LI, retail marketers can make fact-driven assessments of potential markets and trade areas based on location analysis by:
- developing data-driven campaigns by targeting customers through demographic and socioeconomic spatial analytics;
- creating a consistent customer experience by implementing data-driven decision making across departments and locations; and
- reducing operational spending and better management of resources in zoned areas.
Garnering insights from location data has a critical impact on how retailers understand different types of shoppers and their buying habits. From choosing a site location to designing the placement of product and point-of-sale terminals inside of the store, location data is helping retailers navigate the changing landscape by returning the old adage that “it’s all about location.”
Javier de la Torre is the CEO of CARTO, a location intelligence platform.