If retailers don't know where consumers flow, they are flying blind
Best Buy is literally a case study unfolding before our eyes. It is quite literally a test of how today's omnichannel consumers will behaviorally respond to radical changes in a store environment. Do consumers shop Samsung's store within Best Buy first, or the new Microsoft redesign of the PC department? Where do they spend the most time? What do they look at? In the retail store of the future, it is not enough to measure footfalls in the door. Profitable retailers will need to be able to analyze consumer behavior in stores with the same precision as on their websites.
Build it … and they may come, but what do they respond to?
"Footfalls – The single greatest miss in retail metrics" was certainly one of our most popular blog posts this year. In Footfalls, we compare what online retailers track and analyze about consumer behavior, versus what little retailers know about consumers in their bricks and mortar stores. By virtue of design and infrastructure, e-tailers know everything about your behavior - where you came from, where you entered the online store, everywhere you clicked, your shopping cart, conversion rates and what was attached. By comparison, most big box retailers simply track if you broke the infrared beam at the door and entered their store.
There is an old adage in retail that it's all about location, location, location. Before the advent of ecommerce, store real estate was everything. Build your stores in the best locations and consumers will come. In today's omnichannel world of shopping any time everywhere, location is even more important. But, the location that matters most now is the "location" of the consumer, not the store itself. The critical questions today are: what is the location of the consumer, how are they shopping, what are they looking at … especially while in store!
Big changes at Best Buy – Perfect case study for in store analytics!
You had to be living under a rock to miss all of the changes happening within Best Buy stores. Samsung has literally been rolling out dedicated store within store space to showcase their products and integrated technology. In the meantime, Microsoft is collaborating with Best Buy to do a "Windows Makeover" of the PC department in Best Buy's top stores.
So the question is: how are consumers responding? Do they go to the feature displays at Samsung and Apple tables first? If they go to the Windows PC aisle, do they tend to buy more of a solution with more things in their cart? If Best Buy advertises a feature product, do more consumers tend to go to that display … do make a purchase? These are not trivial questions! They are the lifeblood of retailer profitability. Consumer flow and purchase behavior inside stores is absolutely critical to Best Buy's survival.
Meet iInside – An in store tracking intelligence solution at the meter level
Since writing the "Footfalls" post, I have had a number of people provide me with examples of how retailers are quickly moving beyond simply tracking footfalls at the entrance to the store. One of the most popular techniques is location tracking via cell phones. Retailers can literally track if consumers are in the area. If shopping in their stores, they can track and offer promotions via cell phone location tracking. For consumers with smartphones who opt in, this can be very effective. But how do you track all consumers?
Just as importantly, these kinds of tracking solutions can be used to track consumer queues and wait times in line, which have a critical impact on shopping cart abandonment and overall consumer satisfaction. In short, the retailer is no longer flying blind. They can literally measure the flow and impact of a specific event at a given time of day.
There is no excuse for lack of data – The key is actionable intelligence
It is quickly becoming apparent that there should be no excuses for not having consumer behavior and traffic data inside retailer stores. If retailers tap into consumer phones location data, and harvest loyalty data, they now have as much consumer specific information as the online retailer. But, that can be expensive technology involving "Big Data", with potential consumer privacy concerns. Solutions like iInside illustrate that there can be very powerful consumer tracking and intelligence all the way down to a square meter of floor space. More importantly, these solutions are relatively low cost, can be configured quickly to provide real time dashboards.
Data and in store intelligence are necessary, but not sufficient to produce results. The key is asking the right business questions to align the data with the critical outcomes. For example:
- If we invest in a promotion/ad, do people actually go find the offer in store?
- If a featured product is put on an end cap, do consumers stop and dwell there?
- If we have a product demonstration, do people go there … how long?
- How many people are on the race track, but never explore the rest of the store?
- If more consumers stop more places to shop, do they put more in their cart?
Running retail stores is an extremely expensive business today! Changing store designs is not only expensive, but making commitments to a Samsung store within a store is quite literally a life and death decision.
Again, I have no idea of how Best Buy might be measuring consumer behavior within their newly designed stores. From what I've observed on my shopping visits, there are some very different patterns and experiences depending upon what areas of the store the consumer visits first. And, they are not consistent across stores!
Traffic X Conversion = Sales … Engaged Consumers = Profitable Market Basket Attach
There is much discussion and debate about the retail store of the future. Best Buy's new store initiatives are literally a case study unfolding today. One thing is becoming abundantly clear … in the retail store of the future, the location that matters is the location of the consumer in the store. If retailers can't track and analyze traffic at the square meter level of space, they are literally flying blind on developing critical intelligence to measure the results that count … especially ROI.
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Sources:
- Location Image: Marco Torresin; Freedigitalphotos.net
- Windows at Best Buy Image: Blogs.Windows.com
- iInside Company Logo: www.iInside.com
- Shopping Dashboard Image: Watcharakun; Freedigitalphotos.net
- ZDNet: Best Buy: Can stores be asset vs. Amazon?, Larry Dignan; August 20, 2013
- TheNextWeb: Why are Apple, Google, Microsoft and Samsung so interested in Best Buy?, Ken Yeung, August 24, 2013
Having read this I thought it was very enlightening. I appreciate you taking the time and effort to put this article together.
Posted by: Bonnie | October 19, 2013 at 12:37 PM
Marcel,
We use Typepad for our blog platform.
Posted by: Heather Lantz | September 24, 2013 at 11:36 AM
Hey would you mind sharing which blog platform you're working with? I'm looking to start my own blog in the near future but I'm having a hard time choosing between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your design seems different then most blogs and I'm looking for something unique. P.S Apologies for getting off-topic but I had to ask!
Posted by: Marcel | September 21, 2013 at 06:30 PM