Trends In Location Intelligence That Drive Brick-And-Mortar Growth
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.
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.