Understanding retail’s new age of indoor analytics
The technology-driven innovation spree occurring in the retail industry offers merchants, marketers and operators unprecedented shopper insights capabilities — and a host of new opportunities.
The ability to understand the who, when, where and how long of shopper behavior is the essence of the new age of indoor analytics being powered by technological advances. Think of indoor analytics as a hybrid of web analytics and market research survey data measuring actual shoppers’ behavior throughout a physical brick and mortar store. Indoor analytics delivers new levels of insight for retailers into what shoppers do and how they engage with their most valuable asset – their stores.
Retailers have traditionally gauged store success and decision making based on historical sales performance with a good amount of instinct. Over the last two decades, shopper traffic and conversion rate metrics were slowly adopted by retailers as actionable store metrics. However, sales, shopper traffic and conversion rate are no longer the best or most accurate reflection of true in-store performance presently or in next decade. The last decade is not the measure of future success.
In today’s fast moving, tech fueled, data-driven competitive retail environment, the art of retail is still there, but the science of data must be incorporated into the fabric of the business. Data from indoor analytics connects the in-store shopper experience pinpointing shopper behaviors to location and time. Knowing which paths shoppers travel within the store, how long they stay in each shop-in-shop, what departments synergize, which displays attract more shoppers can be measured and impacted to improve store performance.
Today’s consumer is in control transacting with speed, flexibility and no boundaries of time or place. Maximizing every point of the in-store shopper journey is the opportunity to drive revenues, efficiencies and experience. This data will be levered by retail leaders who understand that in order to move the business forward new information tools must be utilized. Indoor analytics is a critical layer of information, which in the short term will be competitive advantage but will be necessary to remain viable in the long term.
Indoor analytics is a continuous measurement of shopper behavior. Survey data has been a traditional method for collecting and measuring in-store shopper behavior. Surveys are typically conducted one or two times per year in a subset of stores with a small number of respondents. Some retailers also engage technology by asking shoppers to read the bottom of their receipt, find a website, log on and then respond via the online survey in exchange for a reward. The duration between the shopping experience and when shopper delivers the actual feedback is unknown, reliant on perfect recall of the shopping experience. In either case, retailers are collecting data based on shoppers’ recollection of an experience. Recollection of an experience versus actual behavioral measurement of the experiences can be very different. The sample sizes are also reliant on those shoppers who chose to invest personal time to participate. Ten to 15% is considered an excellent response rate for customer-feedback surveys. Another phenomenon of these surveys is that respondents tend to be either very happy with their experience or extremely unhappy. That can be great for keeping tabs on things like customer service, but it leaves retailers with a huge blind spot when it comes to how the vast majority of shoppers interact with their stores.
Reliable, consistent and accurate data is necessary to be impactful for commercial application across the enterprise. Actual behavioral measurement produces very different and more detailed analysis of the customer experience. Data around shopper behavior, measuring what most people do, most of the time, helps retailers make sound business decisions informed by shopper data.
The idea of automated measurement of shopper behavior in-stores is not new, but until recent years has been technically inefficient and cost prohibitive. New mobile technologies, cloud computing and powerful analytics engines make indoor analytics easily attainable and actionable for retailers. These new solutions deliver an automated, dynamic and a constant measure of natural shopper behavior.
Indoor location analysis provides detailed insights benefitting multiple lines of business. Operations, merchandising, finance, marketing, consumer insights and innovation teams are making the most of this data. This data reveals the insights on how these lines of business interact from shopper’s perspective as reflected in the data. Retail operators are using it to test new merchandising strategies, such as placing targeted products along newly revealed shopping paths. Stores are testing formats and window displays to measure impact and shopper response. Digital signage is being measured for effectiveness and influence. The relation between the length of digital-signage content, and its impact on shopper dwell and purchasing behavior is measured to understand what is most effective for influencing desired outcomes. Understanding this helps retailers create effective and impactful messaging to the consumer.
Location analytics informs store operators when and where to deploy store associates in order to assist customers or stock key SKU’s. It is being used to create more efficient point-of-sale lanes positively impacting customer satisfaction. Managers use this data to optimize staffing at express and regular checkout lanes based on different shopper behaviors throughout the day or week. This type of data is being used to compare departments within a store, across chains to compare store performance, or even to compare similar departments in across the chain.
Indoor location analytics allows the offline channel to be much more responsive to the needs of the business more like the online channel. Web analytics is standard business intelligence used to optimize website performance. Physical stores now have access to similar data through indoor analytics. Brick and mortar must follow the lead of online and lever indoor location data to optimize performance offline.
The competition in retail today is intense. Consumers are making their choices based on value, convenience and customer experience. Retailers measuring their customers’ behavior with indoor analytics will be the ones harvesting short term business “wins” and building long term sustainability leading to a successful future for their store channel.
Anne Marie Stephen is VP of customer development with iinside, a location performance analytics company. She can be reached at email@example.com and @IndoorAnalytics.