By Ran Ben-Yair, Ubimo
To say that location intelligence is changing
the face of retail is not hyperbolic.
In the same way that the Internet allowed for
the rise of e-Commerce giants like Amazon and eBay, a major paradigm shift in
the industry, location intelligence is now returning power to brick-and-mortar
retailers by allowing them access to the sort of detailed data that online
retailers take for granted.
Exactly how physical retailers are using
location intelligence varies quite a bit, but a couple of distinct trends have
been emerging.
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Location Intelligence Informs
New Location Planning
Choosing a location for a new storefront used
to be a mixture of consulting very broad, generalized census data, making
assumptions based off of competitor activities and trusting blindly in gut
feelings and hunches.
It’s a technique that can often work — the
fact that any store ever remained open is testament to that — but it puts serious
restraints on a business’ growth rate. On top of that, when a poor location is chosen, its eventual failure is very
costly.
Smart utilization of location intelligence
both streamlines and optimizes scouting for new store locations. It starts with
gaining a better understanding of the demographics in and around the proposed
area. Location intelligence can give you a more in-depth breakdown of the
demographics than a general census, including differentiating between local
residents and commuters, other places they shop or visit and so on.
Location intelligence also can give retailers
unprecedented insight into the habits of their competitor’s customers,
providing data on market penetration and customer loyalty. If a major
competitor is showing very short visit times in a particular area, their
customers might be ready to be presented with another option; if they’re
struggling to draw foot traffic at all, chances are good that you will
struggle, too.
Russian grocery and convenience retailer X2
has been using location intelligence to fuel a massive location expansion: They
opened more than 5,000 new stores in two years, and increased profits by more
than 130%. Specifically, they used location data to select prime locations,
make more informed stocking decisions and negotiate lease rates.
Location Intelligence Powers
Audience-Based Marketing
Using location intelligence, you can harness
customer behavior data to not only plan new stores but to maximize the
performance of existing stores.
This is being done by integrating location
intelligence with online and out-of-home advertising — in other words, by bridging
the gap between your customers’ offline and online behaviors. This technique
can be used to target existing customers with special offers based on both
their online behaviors and their real-life ones.
For example, if location intelligence tells you
that you have a loyal customer that visits a particular location every Friday
after work, you can serve them a special offer as they approach your location.
The same data that tells you when customers visit your own stores also tells
you about their other activities, such as visiting competitors, their affinity
for other stores and more, which allows you to build more robust customer
profiles.
However, the most innovative trend we are
seeing in retail is using location intelligence for in-store planning. Through
audience indexing, businesses can understand the makeup of their audience on a
granular, per-store level and customize strategies based on very specific
audiences. For example, if you want to test a new product at select locations,
understanding which locations the product’s ideal audiences frequent will
ensure optimized placement and create the desired impact. Different promotions
can run at different stores based on the audience index of each one. This
brings a level of personalization, once available only in the digital world, to
the physical world.
Exciting, Innovative Times —
Don’t Get Left Behind
We live in very exciting times for the retail
industry. Not only has e-Commerce’s stranglehold on retail began to loosen, but
the emergence of location intelligence is giving physical-based retail brands
valuable tools, tools that help to level the playing field.
I suspect that we’re seeing just the beginning
of the applications that location intelligence can be put to. I also suspect
that brands that don’t want to be left behind will be adopting and executing
data-driven and audience-based marketing strategies.
Ran Ben-Yair is CEO and Co-Founder at Ubimo. Ben-Yair oversees Ubimo’s product direction, strategic development and
execution. Prior to Ubimo, he co-founded LabPixies Ltd. (acquired by Google in
2010), a leading web and mobile app development company, bootstrapping the
company and growing the business to reach tens of millions of users in four
years. At Google, Ben-Yair continued as a Product Manager in Search where he
led and launched large-scale products. He holds a bachelor’s degree in Computer
Science from the Hebrew University of Jerusalem, Israel.
