Guest blog by Murali Nadarajah
Retailers today are looking for more sophisticated ways to understand customers’ buying behavior and are increasingly turning toward big data and analytics to deliver a deeper level of insight. Access to these tools is now topping retailers’ “must-have” lists, regardless of the channels by which they sell.
Analytics makes it possible for retailers to see the choices consumers make as they move through a store. For example: they pause at one display, but not at another; they choose one aisle to walk down and ignore the next; they pick up products but don’t buy whereas they pull the trigger on others. Further, analytics allows e-tailers to track criteria such as click-through rates, site navigation, repeat visits, purchases and abandoned shopping carts.
With more traditional e-commerce retailers opening brick-and-mortar storefront such as Warby Parker, BaubleBar and Zappos and the continual growth of online shopping, retail analytics will become even more important in more clearly defining ROI in the future. According to a TechCrunch survey, 78 percent of consumers prefer to shop in-store and spend six times more in-store than online.
Today’s Use of Retail Analytics
A variety of technology and data analytics is already providing this level of insight (which we’ll dig further into later on). The combined power of technology, big data and analytics can give retailers more precise information than they’ve ever had on just how shoppers operate in their stores.
For some time now, retailers have gathered information on what customers buy, and have used it to more precisely target and tailor their marketing efforts. Store loyalty cards accumulating points to turn into discount vouchers or credits give the retailer the capability to monitor individual customer purchasing behavior. Online, retailers can track customer movements around their virtual store and have an idea which items are abandoned before the checkout stage and “re-target” to remind shoppers of the items they have forgotten.
However, it’s been particularly challenging for many retailers to bridge the gap between the available technology and the ability to actually put the insights to use. A possible solution to this issue is to either hire more personnel with a data/technical background or ensure your analytics partner can provide this counsel.
There are several different types of analytics applied to the more precise tracking of in-store shopping behaviors, such as: zonal analytics, heat mapping, and shopper behavior flow. Let’s take a brief look at each:
- Zonal analytics: Allows retailers to put a fine point on customer engagement and shopping trends by zone, floor or category in shopping centers.
- Heat mapping: Identifies a particular site’s potential (whether it’s a specific aisle or section in the store) by locating hot and cold spots.
- Shopper behavior flow: Shows retailers where shoppers are moving within the space, discovers shopping trends between categories, and identifies the most and least popular stores within a category and across categories in shopping centers.
This in-store technology also helps retailers identify what hours show spikes in foot traffic, how long customers stay in the store, how frequently they visit and who the “VIP” shoppers are. In turn, this allows retailers to better tailor marketing campaigns, better connect sales channels, create more attractive displays and capture lost sales opportunities among a host of other competitive benefits.
For managers of brick-and-mortar shopping centers, being able to map footfall gives them information they can use to increase profitability and maximize rent for retail space. Foot traffic and shopper flow analysis can expose the routes shoppers take through the mall, which is very useful information to potential leasing customers and, for the mall management team wanting to re-model to optimize visitor flow and maximize return visits, not to mention for the setting of price zones according to traffic level.
Wi-Fi and Video
Data gathered from Wi-Fi hotspots and surveillance video cameras is another technology retailers are frequently turning to today. It can be used to create a detailed map of customer behavior going into, and moving around, the store. Brought together with sales system and transactional data, it can build a picture of how well a storefront serves to bring customers in, where shoppers go within the store, if the layout makes browsing easy, if checkout lines are losing customers and other insights into customer shopping habits and needs.
Xchanging undertook a study of five shopping malls in the United States and found that 62 percent of shoppers leave Wi-Fi up on their phones, meaning that wherever they go their phones are pinging off Wi-Fi hotspots and are leaving a digital footprint. Shoppers don’t even need to manually connect to the Wi-Fi for this location data to register – in fact, only around three percent did in this study. From this data, the movement of shoppers around a shopping center can be mapped, providing insight into the floors they visit and the shops they go into.
Add to this content from surveillance cameras and the information becomes even more granular, detailing things like gender/age profiles of customers entering specific stores and average dwell times at window displays. Combine images from cameras with a more localized focus with sentiment analysis software and a picture can even be generated of the reactions and emotions of shoppers as they shop.
Putting the Data to Work
Retailers operate in a highly competitive environment where customer insight provides a competitive edge. Through the use of retail analytics they can better understand their customers and take sales data from the level of ‘what’ to the level of ‘why.’ For shopping center management, this kind of information is likely to become the de-facto standard for retail outlet leasing and will be a necessary component of what property managers supply to retailers. For all of us – consumers and retail businesses, alike – it takes a subtle shift in mindset, one that moves away from perceptions of a ‘big brother’ environment where everything we do is watched, to one where we can see the mutual benefit in information exchange, provided it is carried out sensibly with due regard to security and privacy.
Murali Nadarajah is CEO, Xchanging Malaysia