Analytics has become one of the major driving forces behind retail over the last few years.  Retailers have learned that the more they understand about their customers, the better they can service them and more likely they can create valuable repeat and loyal shoppers.  Along with this trend of gaining better insights, shoppers have also increased the amount of due diligence they perform before buying products, and mobile technologies are a key enabler.

This last Monday, at the NRF show in New York City, we announced the availability of a captive portal solution that brings a new slant to traditional retail analytics.  With over 40% of the population carrying smartphone devices (and growing), retailers are deploying guest WiFi networks that improve the overall shopping experience in their store.  With these new networks comes an amazing opportunity for the retailer to even further understand their customer.  In his blog post Andrew von Nagy stated: 

Analytics are the un-sung driver behind retail Wi-Fi hotspots. As I have previously written in 5 Retail Trends Driving Wi-Fi, retailers want to know who their customers are in order to tailor the in-store shopping experience which helps drive customer satisfaction and ultimately increased sales and profit. Consumers are increasingly using and relying on digital communications while in the store to perform product research, price comparison, and to make purchases. Retailers want the same reporting available from physical stores that they already get from their websites. The ability to tap into this information by offering free Wi-Fi to shoppers and report on usage is one of the main reasons retailers are offering hotspots in increasing numbers since late 2010.

Use of mobile devices in the store brings together the best of the online and offline shopping experience.  Shoppers want to seamlessly navigate between these channels and retailers want to be able to understand how these channels converge and how to provide the best experiences.  With these new use cases, Nearbuy provides a window for the retailer to learn more about the shopper and where to focus their energies.

Amazon announced that December 10th is the day that their physical store competitors officially become show rooms for Amazon.  Amazon is offering up to $5 off products if a shopper is willing to go into a brick-and-mortar store, look at a product, then buy it on Amazon.  Amazon has long represented a threat to the traditional retail sector, but for the most part it was only a direct threat to those retailers' online channel.  As shoppers have adopted smartphone technology, Amazon is capitalizing on the blurring of these retail channels and now can attack retailers where it hurts the most, within their stores.  

I have written a bit about how online is growing rapidly but still only represents a small percentage of any retailers overall sales volume.  The soft underbelly for most retailers has been that store environment, where the lions share of any annual sales takes place.  With smartphone technology Amazon has found a very interesting way to disrupt the physical store channel and potentially attack a market that is 10x the online business they pursue today.

So how will retailers respond?  

Our first recommendation is that they better get a handle on how big of an impact this is making today.  Most retailers understand that their store business is being cannibalized today by shoppers purchasing items on their smartphones from within their stores, but no one knows how to measure this.  Does it happen once a day or once a second?  Retailers need to figure out in a hurry how often this is happening and measure this trend over time.  Nearbuy has some specific ideas on how to accomplish this through guest WiFi networks - helping retailers understand exactly how online content is impacting the store experience (i.e. what content is of the most interest, what are shoppers searching for, etc.).  These analytics will allow retailers to truly quantify the impact of Amazon and other online content sources on the store shopping environment, and can help power them to defend such tactics.  With knowledge comes great power...

Second, retailers better figure out how to offer a mobile in-store solution that provides an even better experience than the Amazon apps.  Price transparency is the tip of the iceberg here, table stakes for a converged multichannel experience.  So retailers need to play off their strengths and leverage the fact that they have the shopper in their store.  Any mobile offering they role out needs to integrate store staff, local inventory, and the fact the shopper can get immediate gratification from buying the product from the store.

2012 is going to be a very exciting year for retail and as shoppers we will see fundamentally new and exciting ways to shop that leverage the best of the offline and online channels.  Retailers who plan on being successful are going to have to take this new mobile fight to heart.

I have written a bit about how the smartphone is a game changer in retail, impacting the way consumers shop in so many new and exciting ways.  Mobile brings many benefits to the shopper including the ability to do product research in the aisle of the store, compare prices in real-time, and connect to social media to garner peer recommendations.  We are now seeing the advent of other in-store services like product navigation (where is the soap?) that will save shoppers time and improve their overall experience.  Retailers are seeing the benefits of bringing the online world into the physical store shopping experience.

However, the mobile device revolution doesn't just impact the consumer.  We are starting to see a trend where the major retail chains are arming their employees and store managers with the very same technology that the consumer is using.  There have been several high profile announcements where these retailers are engaging their store associates with mobile technology in order to dramatically change the way they do business.

In probably the largest announced roll-out, Lowe's plans to deploy 42,000 iOS based devices in their 1,700+ stores.  The initial application for these devices is to allow store employees the ability to access the lowes.com site, check product inventory, and access "how-to" videos.  At some point these devices will also be capable of conducting POS transactions so associates can close a deal in the aisle of the store.  Home Depot made a similar announcement earlier in the year where they plan to spend $60 million on getting mobile devices into the hands of theirs store associates.  In this case, they selected more hardened devices from Motorola as their device of choice.  In both cases, these retailers decided it was time to get more online data in the hands of their sales people in order to bring information closer to the customer.

In the apparel industry, Nordstrom announced that they were bringing 5,000 iOS devices into their stores to be used as mobile point of sale terminals.  Nordstrom, a longtime leader in customer service, intends to speed up the check-out experience and once again provide more information to customers through their trusted sales associates.  

Looking deeper into what mobile POS brings, there is also the potential for it to free up more selling real estate while dramatically reducing infrastructure costs for the store.  Retailers measure their performance on "sales per square foot" and in most large department stores, precious real estate is taken up by the cash wrap.  By enabling mobile POS, Nordstrom and other retailers may be able to do away entirely with their check out aisle.  Imagine the cost savings if the retailer didn't have to pay for these expensive check out stands (tens of thousands of dollars each, 5-10 per store, hundreds of stores...) and that area could be used to house more items for sale.  Decreasing store costs while increasing sales per square foot is enabled by implementing in-store mobile technology.

Today the promise of better customer engagement, easier check out, decreased store costs, and increasing revenues are major drivers for these mobile device roll-outs.  However, there are many details that will need to get sorted out before the true value of these programs can be realized:  

• How do you prevent theft if there is no formal check-out location?  
• Where do the electronic tags get removed and where do items get bagged? 
• What about cash transactions?  
• Is there enough WiFi coverage to ensure constant connectivity? 

I am sure there will be many more logistical issues that will need to be resolved, but the upside is so large that I expect mobile technology in the hands of every store employee to become main stream in the next few years.  Retailers will adapt traditional processes, like customer check out, because the payback is so huge.

Most e-commerce sites today have outfitted themselves with advanced web analytics systems to understand who is using their site, which pages they go to, how much time they spend, etc.  This makes a lot of sense in the online world since there really is no other way to monitor traffic and gain any insight into the customer.  For pure-play internet companies, these analytics are a must have.  However, most multi-channel retailers have also implemented and received the benefits of web analytics.  I am sure the online team raves about the insights they are able to gleam into their customer and how much easier it is to do their job of providing a meaningful online shopping experience.  Don't get me wrong, I do think these analytics are valuable to multi-channel retailers, but its time to start thinking about how to bring these insights into the portion of the business that can provide the most benefit.

As I have posted before, online transactions still only account for about 7% of all transactions.  90%+ of all retail still takes place in the store.  Today store analytics consists of store employees and store management telling merchants what is happening, followed by merchants looking at monthly numbers to see what the effect of certain programs has been.  Stores have always had some form of analytics, but in light of what we can get on the web they now seem inefficient and ineffective.

One of the biggest shopping trends over the last year has been the incorporation of the smart phone and internet into the store environment.  Customers want access to price comparison data, social media, etc. while they are shopping.  Retailers have figured out that this data actually helps increase impulsive buys - having more information at the point of purchase makes the shopper feel better about grabbing something and buying it now versus going home to do research online.  Since shoppers are bringing the internet with them into the store (via their smart phone) why not use analytics to better understand these new patterns?

Web analytics are not enough for the multi-channel retailer of today.  The concepts of being able to identify a unique shopper, understand what they are interested in, see where they go in the store, and know when they want help from a store sales person, those are the new analytics of this retail age.  The smart phone changes everything in retail and it's time for a new regime of analytics to help retailers better service all of their customers.

Wireless LAN technology (aka WiFi) has had a tremendous run over the last decade.  What started out as a consumer technology, quickly invaded the enterprise and began popping up as the network access method of choice by users in universities, healthcare, and traditional corporate environments.  Interestingly enough, retail was one of the first vertical markets where WLAN had its first success.  These deployments were not nearly as glamorous as what we see today in a leading university because they were mostly used as part of a back office function - inventory tracking.

Now that WiFi has become mainstream, we are starting to see new applications of the technology that promise to make our ability to connect, at any time, that much easier.  Deloitte wrote their predictions for 2011 and one that I agree whole heartedly with is: 

"Deloitte predicts that in 2011, 25 percent of North American big box and anchor tenant retailers will begin offering free in-store Wi-Fi access to shoppers. In 2012, the proportion should continue to rise in North America and start to spread around the world"

Once again we will see retail take a leadership role in a new application of WiFi, this time it will be as an "amenity" feature.  Retailers understand that smartphones and online commerce are playing a bigger and bigger role in the in-store shopping experience and that this new trend ultimately makes purchasing easier.  At first most retailers feared that shoppers would use this new technology to price shop their products, but most have quickly realized that as long as their prices are somewhat close, the convenience, personal touch, and instant gratification that only they can offer will ultimately lead to more sales.  Again, from Deloitte:

"In-store Wi-Fi presents retailers with a number of minor challenges. Retailers will probably need to build more and better apps to enhance the in-store experience. They may also need to upgrade their Wi-Fi equipment and network connectivity to support additional connections. However, based on experiences from some early in-store deployments, the costs to address these challenges are not material to most large retailers."

The convergence of smartphones, free high-speed internet, and the "daily deal" phenomenon is fundamentally changing the buying experience.  For retailers there is an immediate need to embrace this new technology and provide an environment that enables the shopper every step along their buying process.  The retailers who get this - which already includes leaders like Nordstrom, Staples, and The Home Depot who have free WiFi access in their stores - will have a competitive advantage as the demand for online access while in the store continues to grow.

Interesting post by Steen Andersson of 5th finger regarding the impact that mobile is going to have on the physical retail environment.  Much of the hype around location enabled mobile retail applications has been around how to get more people into the store.  There are many solutions that offer the ability to alert a consumer when they are near a particular store and maybe even send them a coupon to come on inside.  To be certain, driving foot traffic in a store is a major area of focus for retailers and is a problem worth solving.  However, until recently there hasn't been much attention paid to how to convert the shopper once they are actually in the store.  I have written a post about how the in-store marketing experience is changing and 5th finger's concept of m-enabled commerce is spot on.  The mobile device is going to be a major aid in the shopping experience, and retailers need to figure out how to increase conversions as well as the overall basket size.  All of this leads directly to more profit.

So what's going to be so different about what the retailer can offer within their m-enabled application than what their competitors can do (like Amazon)?  We think location is going to be the major differentiator.  Your location within the store tied to awareness of you (personalization) within the application is what can make a m-enabled shopping application sing.  Concepts like in-store directions which help you find the products you are most interested in.  Or advanced "concierge" assistance where you can push a button and signal your location to store staff so they can find YOU.  And maybe they can even send over a salesperson that is actually knowledgable about the products that you are interested in since they know which section of the store you are in!  And finally, the "holy-grail" of in-store marketing, the ability to send the shopper a promotion for a product that they are standing in front of, in the aisle (location=intent).  Truly influencing at the point of decision.

Way back in the day, Google radically changed the online advertising market with their ability to demonstrate a clear ROI to marketers.  Their ability to charge on a "per click" (CPC) basis fundamentally changed the way the nascent online advertising world worked.  The CPC model let advertisers pay only when someone actually clicked on the advertisement, proving their desire to learn more.  Now advertisers only have to pay when there is true user intent.

But changing the business model was not Google's only trick.  They were able to take all of this user intent and connect people with all kinds of information.  As Google became the dominant search provider, all forms of product manufacturers and retailers had to optimise their online content and store fronts to be seen by Google and the search terms people could and would "google".  One of Google's mantras is to bring all of the world's information to people's fingertips.  With their online dominance they have accomplished this to a large part for merchandizing, bringing product information in all forms to those willing to go online and search for it.  As seen by their revenue growth, organizations are willing to pay a lot of money to have their items show up in those Google results and there is no end in sight as online advertising continues to grow.

But the world is a big place and advertisers aren't going to spend all of their money on the internet.  One group, local businesses still needed to find ways to attract local clientele.  For decades these people trusted the "yellow pages" or put promotions and coupons in their local papers.  They may have even signed up for those discount booklets your local kids baseball team would sell door to door.  Unfortunately this "market" is highly fragmented and dollars had been getting spread in all sorts of direction.  In came the internet and Groupon (plus others including Google) who brought the concept of daily deals to the internet world.  Groupon has effectively soaked up and centralized the local store marketing budget and leveraged the internet effect to show an ROI for the store owner.  Localize advertising on the internet is a growing market and players like Groupon have found a very interesting way to capture these local store marketing budget dollars.

Even more granular from a location perspective, some new players in the "mobile location based" applications space have popped up like Foursquare, Gowalla, and SCNVGR.   These services utilize a combination of the mobile device GPS and a users willingness to "check in" to a location.  Now local businesses can not only market to people in their local communities (aka Groupon), they can actually advertise to them when they are next to their store!  This is of course a monster opportunity as the value of an advertisement is inversely proportional to the distance the consumer is from the actual product (translation: the ad is worth more to the advertiser the closer you, the consumer, are to the product or service they are trying to get you to buy).  This is such a big deal that Facebook has come in with their "places" feature and look to become the dominant player in the location based local market.

The next logical step of course is to be able to advertise to the consumer when they are physically right next to the product being advertised.  You can imagine how valuable it would be for Procter & Gamble to be able to send you that coupon for Tide while you are in the laundry soap section of the aisle (remember the inverse proportional rule for advertising!).  Nearbuy Systems is developing the platform to make this all possible, to truly be able to target market based on the users intent in the store - where they are standing in the aisle.  This form of advertising of course has to be done in good taste and with the user's privacy in mind, but survey after survey suggests that if the store and brand manufacturer can offer a great deal for something you are actually interested in at the time you are ready to buy = BIG WIN!

Location advertising is getting more and more granular. The further refined the technology becomes, the more relevant, useful and powerful the advertising possibilities.

The market for in-store advertising (or its big brother shopper marketing) is huge with the major Consumer Product Goods (CPG) companies leading the charge to influence your buying habits as you peruse the aisles at your favorite store.  This makes sense in context of the old adage "70% of all buying decisions are made within the aisle."  However most of these advertisements are old school - paper based signs, pop up advertisements, end caps, etc.  This form of advertisement is very static and with today's quick changing trends, manufacturers are going to need solutions that are much more nimble.  Despite the difficulties that this presents, the big CPG players seemed very committed to increasing their spend in this area as they focus on consumer behavior.  Procter & Gamble has gone so far as to term their marketing focus as "store back" - basically meaning that if your new marketing idea isn't good at the store, forget about it.

Many retailers are beginning to flesh out their digital media strategies, which is a fancy way of saying that they are trying to figure out more ways to sell ad space.  They are opening up their web sites, adding monitors to their stores and even cross marketing with new partners (ex. Toys R Us offering Disney cruises in their stores).  While retail has traditionally been a pretty low margin business, digital advertising has not.  You can imagine the business impact of these new types of strategies on the bottom line.  

Now, in comes mobile marketing.  All of the sudden, retailers have a new medium to connect with their shoppers.  Manufacturers are certainly willing to pay more per impression the closer they can connect the consumer with their product - an ad received at home is not going to be as effective as an ad received when you are 3 feet from the actual product.  If the retailer can connect the manufacturer with an interested shopper inside the zone of where 70% of all decisions are made...you can hear the cash register ringing!

Things get pretty interesting when you can combine the store marketing trend with digital media.  Its no surprise that the mobile device will be the major intersection point.

Interesting article today from Stores Magazine about Mashop - the retail version of the Mashup.  The basic premise is that shoppers now want all of the information that they get from the web at the same time they are physically shopping for an item.  I think this is a great name for something that is drastically changing human behavior; the way we shop.

Internet retailing brought new levels of personalization, loads of information, and price transparency to a process that for many was pretty complex.  The idea that a store could tailor its look-and-feel, product selection, and service based on you is pretty darn powerful.  After having that kind of experience who wants to walk into a WalMart?  Well, unfortunately its hard to try on a shirt online and there is just something special about taking that item home with you after passing through the check-out lane.  This idea - Mashop - that we can actually bridge these 2 worlds together, bring the best of online and offline shopping together, is pretty huge.


It is becoming pretty apparent that the mobile device (smartphone) is going to be the device that really ties these two experiences together.  The fact that these things are basically super-computers that fit into our hands, allows us easy access to all that online data while we are actually standing in the shopping aisles.  For anyone who has actually tried this the benefits are pretty great - access to product information, price comparison, etc.  The experience still has a way to go because it is not very integrated, and by that I mean that the apps that provide the most value today aren't tied into the store that I am in.  Or, if I use the store app, usually the experience of that app is like using their web site versus it knowing that I am actually in their store.  

Here is where I think location based services comes in.  To really take advantage of the offline and online experience, there needs to be a high degree of personalization.  I want the app to know its me and understand all of my preferences, and also to have it know where I am.  If I am in the store, have the app be part of that experience!  My point is that LBS needs to be part of the Mashop.

This is going to be great not only for the user, but the retailer and their manufacturing partners as well.  Just think how many store-personnel-hours will be saved by having shoppers find what they are looking for by consulting their smartphone versus having to ask someone.  Think of what a great experience it will be when you actually need a store sales person's help, and being able to push a button on  your phone rather than having to walk all over the store (and the store actually sending over someone who knows something about the department you are in!)  Won't it also be great when your device reminds you to pick up batteries for that new toy your buying as a gift (batteries not included).

So get ready to Mashop at a store near you in the not too distant future...

This is the final installment of our smartphone user survey.  Thanks again to everyone who responded, your feedback is much appreciated!  

Our final questions in the survey revolved around how a retailer's specific application would be meaningful to a smartphone user and which features within that application would be most useful.  One of the big questions I am most often asked is "are people willing to download a specific app from a retailer versus wanted to use one generic app that spans all retailers?"  My feeling is that many of the big stores we shop at - Target, Safeway, Trader Joe's, etc. - own the brand experience.  I am certainly willing to download the four or five apps from the stores I go to frequently and would much rather have that same brand experience rather than relying on some form of white label application.  I may not be interested in an app for every store I ever go into, but certainly those that I frequent often.  Based on our survey it seems that the majority of you also agree.



Over 70% of the people responding to the survey agreed that they would be willing to download an app from the store directly.

The final question in the survey focused on which features within the app would be of the most interest.  For years people have been talking about making "offer" to customers in the aisle and pushing coupons, but many industry pundits have been very concerned about spamming their best customers.  I too have felt that getting too many things pushed at me during my shopping experience would actually make the experience worse, but it seems that the idea of getting a "better deal" trumps most concerns.  Over 88% of respondents cited getting coupons and promotions to be of value within the app.



Other leading features included price comparison tools, product information and reviews, and payments.  Surprisingly very few of our respondents wanted connections back to social media.  This could have been due to the demographic responding to our survey - 60% male, 75% between the age of 30-50 - but also shows that people want immediacy in the mobile shopping apps.  People want features that help them accomplish their goals of this particular shopping trip, the mobile app needs to help me figure out what I want to buy now and ensure my instant gratification.

I hope the data we were able to collect is useful and we appreciate everyone who participated.