Monday, July 15, 2013

Retail Stores Tracking Shoppers In-Store for Big Data

Retail stores like Nordstrom and Family Dollar are monitoring customer behavior inside stores using their smartphones, and gather data (e.g., dwell times in each aisle), that can influence merchandising, store layout, product placement, and offering customized mobile coupons.

This is similar to what websites and online retailers (e.g., Amazon) do in terms of collecting user data (number of page views, clicks, repeat users, etc) to influence page design or product recommendations on web pages.

In 2012, Nordstrom started testing new indoor tracking technology that allowed it to see customers’ movements by detecting their smartphones' Wi-Fi signals. Airports and coffee shops like Philz Coffee are also getting into the game of leveraging indoor location analytics technology from Cisco or Euclid, to understand shoppers dwell times, repeat visits, etc.

Indoor location analytics solutions provide the following insights:
  • Foot traffic - Count how many people walk by a store and how many enter (by leveraging the signals between a smartphone and a Wi-Fi access point)
  • Dwell times heat maps - How shoppers navigate. e.g. men spend only one minute in the coat department, which may help a store streamline its men’s outerwear layout (by leveraging video footage)
  • Loyalty - Recognize returning shoppers (mobile devices send unique ID codes when they search for WiFi networks. Stores can now tell how repeat customers behave and the average time between visits.
Most smartphones (especially iPhones) are set to look for Wi-Fi networks, thus, a store that offers Wi-Fi can pinpoint where the shopper is in the store, within a 5-10ft radius, even if the shopper does not connect to the WiFi network. The solutions can also use data to map customers’ paths inside the stores. For more on these solutions, see the Indoor LBS for Retailers report here.