Location-Based Shopper Analytics

When Nordstrom openly experimented with tracking its customers’ movements in-store through the Wi-Fi signals from their smartphones, shoppers became unnerved and the program ended in May partly because of their complaints. Yet many people have no problem with tools that track their movements online, letting website statistic services like Google Analytics and e-commerce sites like Amazon.com know who they are, how they behave and what they buy.Compared to online retailers who gather consumers’ “digital crumbs,” bricks-and-mortar stores are “disadvantaged” and only want the kind of insights that e-commerce sites “have in spades,” according to a July 14 New York Times report about Nordstrom. Location tracking and location-based profiling could help stores improve and personalize shopping experiences.There are a number of location-based service providers working with the likes of The Home Depot, Coca-Cola Co. and Cabela’s to achieve these goals. While the technologies and objectives differ, in general they either aim to provide for an Amazon type of experience centered on individual shopping behavior and personalization or for Google Analytics type of insights – how many people come through the doors, how many are repeat visitors, which aisles or departments shoppers visit, and how much time they spent there.“That’s our core mission statement right now – we want to be Google Analytics for offline retail,” says Michael Minar, a data scientist at Palo Alto, Calif.-based Euclid, the company that worked with Nordstrom.Web-Style AnalyticsThe higher-level approach, called macrolocation, looks at the store and the world beyond to understand traffic patterns, whereas microlocation is interested in individuals inside the store, says Eric Newman, VP of products & marketing for Digby, a mobile commerce and marketing technology provider based in Austin. Macrolocation technology notes the number of people – or rather the number of devices – that pass by a store as well as those who enter it. Since dwell times are also noted, stores can assess whether window displays are engaging and if they draw people inside. Dwell times also indicate how long shoppers stand in line at checkout so retailers can adjust staffing levels.The data paints a picture of a store’s health and operations. It isn’t intended to paint a portrait of individuals. No personal data is captured – just each smartphone’s unique identifier called a MAC (media access control) address, identifying the device to the Wi-Fi network in a series of ongoing signals. Data on shoppers is bundled together to create an aggregate report of anonymous information, resulting in a clearer understanding of foot traffic. Retailers like Nordstrom that partner with Euclid post signs outside the store so shoppers who don’t want to be tracked can disable their Wi-Fi or take measures to make their MAC address untraceable.Although a MAC address does not reveal a person’s identification, “you can make the assumption that it’s the same person carrying the device each time it enters and therefore determine the percentage of shoppers that are new versus repeat shoppers, the time between visits and other insights,” says Tim Callan, chief marketing officer at RetailNext (formerly BVI Networks), a San Jose, Calif.-based in-store analytics provider.What cannot be determined is a shopper’s precise location, as the technology can only place a signal within a 10-foot radius. “So it’s OK to say someone made it to the sporting goods section of a big-box store, but it’s not OK to say they made it to tennis racquets,” Callan explains. And because Wi-Fi-enabled smartphones don’t send signals constantly, shoppers can cover a lot of ground between “pings,” meaning retailers may miss critical parts of their journey.“You don’t want to use that technology alone,” says Callan, whose company also uses video footage along with retailers’ people counters and POS system data for additional insights. “Essentially, you cannot have a good in-store analytics solution that is a single technology.”The Amazon Experience to StoresSeveral other providers use Wi-Fi to track but go a step further by pegging phones to individuals, usually through an opt-in program involving a smartphone application. In time, such apps will give access to robust shopper profiles, and the moment someone enters a store, she’ll receive personalized recommendations based on her purchase history, her digital shopping list and perhaps even her online browsing from the previous night. Wi-Fi signals will track her movement in-store, enriching her profile. So if she suddenly starts frequenting the vitamin aisle, she might receive recipes and offers for healthy foods.Providers like Placed, Locately and Encino, Calif.-based uSamp assemble large communities of panelists to track and survey in exchange for deals and incentives such as gift cards, sweepstakes entries or charitable donations. Locately, based in Boston, combines GPS location analytics with “in the moment” mobile surveys sent to panelists’ mobile devices, which “allows us to link the ‘where people go’ with the ‘why’ behind their decisions and activities,” says CEO Thaddeus Fulford-Jones.The Locately approach combines macrolocation with microlocation, concerning itself with traffic patterns and drive-by behaviors as much as with visits and in-store behavior. Such analysis answers questions such as why, to get to a particular store, a panelist drove past three of its competitors.But while neither GPS nor Wi-Fi can pinpoint a shopper’s location down to the aisle or category, by signaling her arrival it may trigger a survey designed to evaluate the effectiveness of in-store marketing. By asking which categories she shopped, retailers and CPG brands can determine if she ought to have seen their activation. If so, did it make an impression? Did any of the featured products end up in her cart?Placed, based in Seattle, recently worked with a high-end clothier to figure out why Millennials frequented its stores but seldom bought anything. For clues, “We looked at where else they went to in the physical world,” says founder and CEO David Shim.Turns out, they were buying their clothes from places like Ross and Burlington Coat Factory, apparently browsing the high-end retailer beforehand to determine which fashions were “on trend” and then seeking them at a discount, Shim says.Another Placed study of panelist behavior showed that shoppers engage in “showrooming” – scoping an item in a physical retail store only to buy it later online – in some unlikely places, including PetSmart. And in a macrolocation study of how Hurricane Sandy’s approach affected consumer behavior, RadioShack saw the biggest spike in traffic. Three months later, it came out with a preassembled disaster kit, Shim says.Shopper Marketing Isn’t Real EstateOther location-based technologies include Bluetooth networking, geo-fencing (which sets off a trigger when a device crosses a predetermined boundary) and cellular network data. Drivers with cell phones “ping” towers for network access as they travel, making their movements traceable. Used in conjunction with Google Maps, the data reveals when a car enters the parking lot of a store and how long it stays, explains Alison Chaltas, executive vice president of shopper and retail strategy at GfK, New York.But shopper marketing is not like real estate. Location isn’t everything. “It can help personalize, but location as the only context for messaging? It doesn’t work,” says John Caron, director of marketing for Catalina, a global “precision marketing” firm with U.S. headquarters in St. Petersburg, Fla.Moreover, stores can pinpoint a guest’s location without investing in costly Wi-Fi infrastructure or making her feel stalked. Citing Stop & Shop’s “scan and bag” application as an alternative, Catalina director of mobile Patrick Moorhead says “what really tells us where you are in-store is that you just scanned a box of crackers.” That not only makes you a candidate for a mobile cheese coupon, he adds, but it may also prompt the app to announce a new variety or send a casserole recipe calling for crumbled crackers as a topping.Moorhead believes location-based marketing is heading toward a “single unified app experience” culminating in mobile payment. In the meantime, location-based technologies are pretty much all over the map. This is an example of the analytics available from iInside, an indoor analytics company that is part of Yorba Linda, Calif.-based WirelessWERX. The first department visited by shoppers is a key indicator of intent, as are the most trafficked departments.

Location-Based Shopper Analytics

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