How can location-based marketing reinvent the in-store experience?
Bricks-and-mortar stores have had a hard time of it over the last five years, as online shopping has seized a growing proportion of customer spend. And with BHS recently announcing it will close all 163 of its stores, the signs are that this year will continue the trend.
However, a growing number of leading-edge brands are redefining the role of the bricks-and-mortar store. British tech firm Dyson, for instance, announced it will open its first High Street ‘Apple-style’ store, while even online giant Amazon launched its first store last year, in a bid to improve its click and collect offering.
In fact, in a recent report by Pierre Audoin Consultants (PAC), 73% of leading European retailers reported that they expect their bricks-and-mortar stores to become more strategically important to them in the coming five years.
Adrien Nussenbaum, US CEO and co-fouder of Mirakl, notes: “We find an increasing number of retailers marrying digital components and physical storefronts to draw customers in and satisfy their need for an interactive experience, while still meeting their demand for a tangible product that they can touch and feel.”
Nussenbaum highlights the example of Rebecca Minkoff’s digital changing room. “In 2015, for the debut of her first physical store, Rebecca Minkoff and her team brought in eBay’s retail innovation group to build a new kind of in-store experience – the digital changing room. As customers walk into the store, they are greeted by a huge screen that lets them finger-swipe through clothing styles which they can then select to have sent to their changing rooms to try on – blending the digital and physical.”
One technology that brands are also embracing as a means to redefine the retail experience are beacons, with Ted Baker’s deployment of iBeacons in its Westfield London store just one example. The fashion brand installed Iconeme technology which connects with a free app when customers are within 50 metres of Bluetooth-enabled mannequins in-store.
This allows the mannequins to communicate with customers via smartphone, providing details of the clothing on display, including price and links to purchase the items online or where they are in store, as well are more detailed information about the goods, access to offers, and the option to share with friends.
The tech even works when the store is closed, so that customers that pass by the shop out of hours are still able to shop online via the window mannequins.
Mubaloo Innovation Lab’s head of innovation, Mike Crooks, notes: “Location-based marketing solutions have finally presented brands with the opportunity for retail outlets to compete in the digital era and complement these brands’ online or mobile offerings. Location-based technologies have empowered marketers by finally helping close the gap between digital and physical customer experiences.
The aim is to facilitate a more personal interaction with customers, leading to a better retail experience.
"Customers have high expectations when it comes to the retail experience, often wanting instant gratification, price matching or excellent customer service. This is where the promise of location-based marketing lies.”
He continues: “Location-based marketing can be used to provide customers with additional product information, such as stock availability, product reviews or the ability to pay or reserve items from their phone, based on their proximity to products on the shop floor. In some retail environments, particularly for premium brands, this type of assisted customer service could work to alert employees that loyal or important customers are in-store. This could be especially relevant to remind employees if they’ve dealt with customers before, or help employees gain a better understanding of particular customer needs. Ultimately, the aim is to facilitate a more personal interaction with customers, leading to a better retail experience.”
Fast food restaurants have been quick to embrace location-based technology, as a way to enhance the retail environment.
Taco Bell, for instance, launched a mobile app that enabled customers to purchase food from a particular location before they arrived in-store, so that they could then pick it up from the outlet without queuing. The app was downloaded over 2 million times in the first four months of its launch. Elsewhere, Dunkin’ Brands, Starbucks, Chipotle and Burger King are all also investing in in-store solutions to improve the shopping experience.
Robert McFarlane, head of labs at digital agency Head, adds: “A great example of location-based marketing is Target, who initially trialled beacons in 50 stores in New York, Chicago and the West Coast and are now rolling it out to all their stores. By getting Target’s existing mobile apps to work in conjunction with in-store beacons, they were able to introduce useful new features based on location data.
“From beacon-enabled smart shopping lists that re-ordered themselves according to location, navigation maps, vouchers, and a link-up between online search and relevant notifications in-store, Target was able to use location-based marketing to improve the customer experience.”
So how can retailers identify the best ways that location technology and location data can be used to enhance their customers’ in-store experience?
“Retailers should only be using LBM it if it helps to make the customer’s life easier,” says Crooks. “Companies who approach it from a purely sales approach will find that they end up creating experiences that fail to properly engage customers. Customers want something that fits into their lives, rather than complicates it. Retailers therefore need to look at the customer experience in their stores to see where it falls down. Too many retail experiences at the moment are about queuing or trying to find help from employees. Others mean that customers get bombarded by employees when they enter stores, making customers feel awkward about browsing. Others see special customers being unrecognised until it’s too late.”
There will be a plethora of trials and strategies deployed in the coming years; some will win big and some will hopefully fail fast and learn.
Crooks recommends that brands start small. “Brands will need to understand how their customers interact with them across all channels, mobile, online, in-store in order to effectively identify the gaps in their experience. There is a time and place for mobile interaction, commonly referred to as a ‘digital moment’ and the goal is to understand how to make these moments great. The starting point will be in the data and in some cases obtaining data will be a prerequisite. With clear objectives brands can develop strategies that allow them to use customer data to better target customers and improve the in-store experience.”
Joe Till, head of multichannel solutions, at One iota Limited, adds: “When it comes to bolstering the in-store experience, variety is essential, and it’s clear to see that the successful retailers and brands are the ones offering a technology-rich blend of entertainment, interactivity and easy shopping.”
Crooks fully expects there to be a spike in the number of retailers that explore how location technology can enhance their retail experience in the coming years – though there will likely be mixed results. “There will be a plethora of trials and strategies deployed in the coming years; some will win big and some will hopefully fail fast and learn. It is not a straightforward task but with the right approach brands can make the experience for the consumers fabulous,” he says. “Location services will not just be offered on mobile devices, in brand apps or partner apps, but will be leveraged by a variety of digital media. This will undoubtedly include digital signage, dedicated in-store screens and virtual reality experiences that engage the user in moments that they want to share and repeat.”
Mark Thomson, retail industry director EMEA, at Zebra Technologies, concludes: “Marketers need to stop seeing the physical store as tired and old, in comparison to its younger, cool counterpart – online. Location-based technologies change all of this and actually paint a promising future. These technologies will allow us to merge the physical with the digital and give it a voice. Whether marketers use this to drive footfall or for data collection, it would be foolish to ignore what we can learn from this.”
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Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.