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Retailers Hoping Location Tech Offers Key Advantage in Mobile Wars

Thursday, January 24th 2013
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Summary:

Retailers at the National Retail Federation show held last week in New York City were searching for the next big thing to help their physical retail businesses stave off the onslaught of “showrooming” with mobile devices, resulting in online purchases. The answer may be to enlist location technology for marketing and in-store navigation. Editor in Chief Joe Francica looks at how location technology is impacting retailers’ mobile strategy sooner than expected. 

Location, location, location. These words have rung true for years in retail site selection. Whether you were vying for the best spot at the intersection of 4th and Main or the endcap at Walmart, location was king. The problem now is that the world has gone both mobile and global. The importance of a good location seems to have diminished. "Showrooming" is a convenient way to beat the retailers at their own game. Malls have become one big department store window where shoppers stop to look, and then buy online.

Consumers have changed their buying habits because online buying has become a convenient and often less expensive way to make purchases. So, what can retailers do to lure back the reluctant shopper and improve the consumer experience?
 
Two articles appeared last week that address the challenges of today’s retailers. One, from the Wall Street Journal, reviewed the National Retail Federation’s (NRF) annual conference held last week in New York City. The other, from Street Fight, detailed how location technology could be the answer retailers seek.
 
WSJ’s Andria Cheng wrote “Stores Hunt for Tech.” In it she described the impact of mobile technology on retailers and interviewed several retail executives. She offered these mini-case studies:
  • Mobile devices have "put retailers on a level playing field," said Brendan O'Meara, managing director of the world-wide retail sector at Microsoft Corp.
  • Getting the mobile strategy right can make a big difference for retailers, said Alison Paul, leader of Deloitte's retail and distribution practice. When consumers use mobile devices in physical stores, there is a 72% chance they will turn their browsing into actual purchases, a 14% increase above those who don't use mobile devices, Ms. Paul said.
  • At HSN Inc., mobile sales year-to-date through the third quarter exceeded $100 million, compared with $65 million for all of 2011, said Chief Executive Mindy Grossman. She said online, mobile and other digital sales now represent 40% of its total business as HSN evolves from its traditional home-shopping channel model. 
To accommodate the changes taking place many retail establishments are now considering the installation of free Wi-Fi. This eventuality brings into play another issue I reported on last week: indoor positioning and the use of geofencing to alert in-store shoppers to sale items or to issue coupons. (See “Attention Shoppers: aisle411 a Hit with Retailers”). Retailers are not only faced with keeping buyers from going online to competitors  to make their purchase, but also providing the additional incentive shoppers may need to make an immediate purchase at the store location. 
 
Anna Bager, vice president and general manager of the Mobile Marketing Center of Excellence at the Interactive Advertising Bureau, wrote “Why Location Is Key to Mobile Monetization” for Street Fight. She reiterated some of the things most geospatial professionals have known for quite some time about location-based marketing’s applications for hyperlocal information. Coming from someone outside the location industry, her observations are all the more significant to the broader retail community.
Geo-aware … allows advertisers to recommend certain actions based on the consumer’s relative position. Dynamic advertising and HTML5 have really helped this effort be successful, as advertisers are able to drop in different store locations, hours, phone numbers, and even a map. Meanwhile, local search has really taken off on mobile. To be clear, local search is not specific to search engines but can also be found in maps, directories, social media sites, et cetera. Local search is important because it shows clear intent from a consumer, and it is crucial for all businesses, whether national brands or small-to-medium firms, to show up in those search results, either through paid advertising, businesses listings, or organic results.
I think advertisers and retailers are surprised at how quickly location-based marketing has become important. The advent of QR codes and bar code scanners and the proliferation of location-aware smartphones, now with apps like aisle411 and Point Inside, have become the catalyst that has exploded upon the retailing scene, creating an urgency to catch up on the hyperlocal marketing opportunity.
 
Bager goes on to say, “Going forward we expect to see strategies using location emerge besides these three trends. As more media companies start providing this type of data for mobile, brands and businesses will be able to extract more insights about their audiences beyond what is needed for basic location targeting. Location is becoming an even more powerful data set.”
 
While some retailers are still trying to figure out their best strategy for customizing a Web presence for mobile devices, the “location” component must now be factored immediately. Those left behind will find their customers being routed to their competitor, from the street to the aisle to the product.

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