Reinventing the Retail Experience with In-store Analytics and Real-time Communications

Published February 02, 2018 by Glen Kunene

E-tailers have the benefit of tracking cookies and web analytics tools to calibrate every aspect of the online shopping experience. Brick and mortar retailers aren’t as fortunate. They traditionally have had to rely on much spottier customer insight. Yet in an era that Forrester Research has dubbed the age of the customer, physical stores are subject to the same high expectations for shopping experiences.

In fact, the CEO of upmarket department store Harvey Nichols, Stacey Cartwright, believes that the way for physical retailers to remain relevant is to focus on the quality of the experience they deliver. This has led to startups such as Streetlike creating entire businesses on retail experience innovation.

One way brick and mortar retailers can deliver these experiences is by employing in-store analytics to gain insights into their customers’ behaviors and using that knowledge to engage their customers as they shop. The use of in-store analytics is a revolution in both how retailers understand their customers and how they communicate with them.

Let’s explore how in-store analytics will enhance communication between retailers and shoppers.

How In-store analytics works

Ever thought it was strange for a furniture store to offer free Wi-Fi? It makes sense for a coffee shop, but surely the furniture store wants you to focus on their sofas, tables, and beds, rather than your smartphone.

Well, when you enable Wi-Fi on your phone, your device sends out a “what networks are available?” request every few seconds on each Wi-Fi channel. It then listens for a fraction of a second and, when a response comes back, updates the list of available networks.

Here’s the interesting part: when it probes the Wi-Fi spectrum, your phone broadcasts its unique MAC address to any device that’s listening. So, as you walk around that furniture store, each Wi-Fi probe acts as a beacon for your location. With multiple Wi-Fi access points in a single store, it’s possible to somewhat precisely locate each MAC address. And at no point do you need to actually join a Wi-Fi network; this happens passively, as far as the owner of the device is concerned.

Even though the device shares nothing about its owner, the retailer can build a picture of what individuals do as they walk around a store. How many customers made it to the second floor? How long did people tend to spend in a particular area? How long do individuals wait before returning to the store?

That’s useful in understanding broad shopping habits and intervening with informed in-store customer communication. Rather than having the customer communication happen at the convenience of the business-as much of it arguably does-it can happen at the customer’s convenience. Sending an SMS when there’s a sale is an effective marketing tactic. Sending an email every month could be a perfectly fine drip campaign. Even good old direct snail mail might boost foot traffic to a local store. But imagine the more customer-centric communication of a timely WhatsApp message asking whether a customer needs assistance when the furniture store operator knows that the customer has spent the past 15 minutes in the sofa department. As we’ll see later, tieing MAC addresses to individuals – and their WhatsApp accounts – takes some effort on the part of that person.

So, how can tracking a MAC address anonymously help personalized customer communication?

Understanding individual behavior in the retail experience

As data builds, that MAC address ceases to be a randomly generated number and instead represents the behaviors of a real person. At this stage, there’s nothing to identify the individual who owns the phone but it’s possible to build a picture of who they are.

Companies such as Euclid Analytics and Geoblink are helping retailers not only to capture what happens in their own stores but to work with an aggregate drawn from data across multiple locations. These companies scramble the MAC addresses themselves but allow retailers to see what individuals and groups do in other locations. By analyzing this broader data set, companies like Euclid can help retailers to infer gender, age range, and perhaps even a person’s purpose for visiting a particular store.

Whether gathered in multiple locations or over a longer time period in just one location, as the data builds it becomes useful in crafting more personalized communication, which can help increase sales and enhance the customer experience.

Relying on anonymized data can deliver only so much, though. And that brings us back to why the furniture store offers free Wi-Fi. As soon as someone signs up for that Wi-Fi, the store can associate the MAC address with whatever data they capture in the sign-up process. At the very least, that’s likely to be a name, email address and cellphone number. Again, that person never has to use the Wi-Fi: as long as they keep the same device, their MAC address and identity are linked.

Other retailers might not rely just on free Wi-Fi. They might have a loyalty or coupon-based mobile app that requires users to provide some personal data. Depending on the phone’s operating system, that app might be able to access the MAC address itself and make the connection for the retailer. Either way, retailers can incentivize shoppers to make their MAC address personally identifiable. And when that happens, communication can truly become personalized.

Respecting the shopper’s personal data

Does any of this sound just a little bit creepy, though? Either through inertia or without realizing it, most people publicly surfing the web are constantly being tracked. Sure, there are some loud voices of complaint but the vast majority of people accept it or don’t care.

As the company behind smart recycling bin advertisements in London and Nordstrom in the US discovered, people are less keen to have their physical location tracked. Even if it’s only an anonymized MAC address, such tracking could feel intrusive.

In Europe, the GDPR might even consider a MAC address to be personally identifiable information, which could have implications for what sort of consent must be gathered before tracking people. The UK’s Information Commissioner’s Office has gone as far as recently publishing guidance on Wi-Fi tracking. In this environment, it would be both legally careless and counterproductive to make customers feel spied upon.

A value exchange for a richer retail experience

The answer, perhaps, is to take a tip from the loyalty schemes of large retailers: provide a genuine benefit to customers in exchange for gathering valuable data on their habits. Just as loyalty schemes such as Air Miles and Tesco Clubcard offer coupons, cashback, and exclusive store events, retailers can build similar value into retail location tracking and analysis. Rather than silently track customers, they can volitionally opt in to a mobile-phone enabled rewards program when they enter the store-a loyalty scheme for the 21st century.

Location tracking has the potential to transform how retailers communicate with their customers. It will provide the insight to know precisely when to engage and when to leave someone alone. However, it will work only if customers can see a tangible benefit to giving up some of their privacy.

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