Whether it is McDonald’s determining which locations are ripe for kiosk ordering systems or a mom-and-pop hardware store considering opening a second location, location intelligence and mapping technologies are valuable tools for retail and commercial industries. As over 15,000 users gathered together at Esri’s annual user conference this July know, a company that wants to reach new customers or users, expand offerings or break into a new market must first understand its core customer, and this often involves tapping into demographic information that helps shape smart business decisions.
Analysts are able to use location intelligence powered by a modern geographic information system (GIS) to find insight on market conditions. This includes knowing what kind of products a customer browses and buys as well as what he or she cares about, and why he or she might be loyal to a particular brand. It’s a form of modern-day psychology that draws heavily on digital data to find insight on customer groups while respecting individuals’ privacy.
Consider a short list of the data sources that retail executives can use to understand customers and shape conversations:
- Loyalty Data from their CRM;
- Point-of-sale transactions and market basket data;
- Indoor movement and product placement analysis;
- Demographic and psychographic profiles of consumer groups in certain neighborhoods, cities and regions;
- Direct feedback from social media posts and in-app comments;
- Mobile buying and browsing habits.
With relevant data and tools, a retailer can create the right conversation with customers in the right place, reinvigorate the shopping experience and drive competitive edge.
Location Intelligence Yields Customer Insight
Using location intelligence, the goal is to convert data on customers’ addresses into insight on their tastes — and, ultimately, ways to communicate with them that feel personalized to their preferences.
To do that, companies use a technique called geo-enrichment — a method of converting customers’ addresses into insights based on where they live. What sounds like sleight of hand is actually a decades-old process updated for the digital age. It rests on a simple premise: A retailer’s best customers often share behavioral and attitudinal traits — they may be soccer moms or outdoor enthusiasts, devotees of alternative medicine or single parents on tight budgets. While some retail executives assume they know who their core customers are, many who use data-driven commerce find that they’ve actually gotten this wrong.
Analysts are able to use location intelligence powered by a modern GIS to find insight on customers. Using GIS-based smart maps, a business can plot the locations of the store’s best customers, then convert that information into group-level demographic and behavioral data to maintain the privacy of individual shoppers.
Analyzing Market Conditions Around Each Store
The next step in boosting sales involves understanding the trade area around each store. Most regional and national retailers study this information as they plan new locations — scouting potential customers and analyzing competitors. But it’s an exercise that must be repeated to be effective long-term.
To establish a store’s trade area, retailers can analyze a combination of in-house and third-party data. POS and CRM systems provide information on existing customers, while software such as GIS delivers insight on customers as well as would-be shoppers and competitors. Geography provides the key backdrop.
An equally important feature of the trade area is its competitive dynamics. Here a company combines its executives’ industry knowledge with location intelligence sourced from GIS to see how competitors are growing, where their trade areas overlap the store’s, and where they’re stealing market share. With a better grasp of its core customers’ motivations, the company’s C-team can infer why they are migrating to the competition. Are competitors opening stores where high-earning professionals spend their workdays? Are they offering better unified commerce options to complement their demanding schedules?
Draw Details From The Data
One powerful tool at their disposal is the Census Business Builder – Small Business Edition as well as their Regional Analyst Edition. These are innovative, simple-to-use cloud-hosted mapping applications that allow users to easily navigate and use U.S. Census Bureau key demographic and economic data to help guide their research into opening a new, or expanding an existing, business. The tool dynamically combines Census geography and data, such as:
- Demographic, socioeconomic and housing data from the American Community Survey;
- Business data from the County Business Patterns, Non-Employer Statistics, Economic Census, and Survey of Business Owners;
- Imports and Exports data from the International Trade program;
- Consumer spending data from Esri;
- Your own data via Excel file upload feature.
The tool provides easy access to information about potential customers and similar businesses, and the data is presented in a map-based interface. Updated every three to six months with new data and functionality and released on the cloud, the CBB provides power GIS capabilities to their users, including the ability to overlay multiple reference layers over data on maps — such as zoning areas, trade and workforce data. CBB also allows small business owners to create reports to take to lenders to justify business decisions and secure funding.
In today’s fiercely competitive environment, commercial retailers must use every advantage to acquire retail customers, plan market expansion and contraction, locate profitable sites, stay ahead of changing customer tastes, and act faster than the competition. Location intelligence can help you plan and mitigate the rapidly transforming commercial landscape.
Gary Sankary is Industry Marketing Strategy – Retail for Esri. He joined Esri in 2014 after spending 30 years in the retail industry, starting in his parent’s family business more than 40 years ago. Along the way Sankary has worked with Cost Plus Imports, Mervyn’s and Target Corporation, where he led a number of cross functional teams developing technology and business process strategies to support store and digital merchandising initiatives. His extensive background in merchandising, product development, planning and supply chain management have provided unique retail insights for Esri customers and partners, helping them to extend their business capabilities with mapping and spatial analysis. Sankary continues to identify and develop retail focused technology partners, helping them connect with retailers to extend critical business capabilities through the implementation of location strategies and mapping technology.