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Smartphones — Shifting power back to retailers through localized data

3 min read


Simon Thompson, Esri Director of Commercial Industry

Technology and the recession have changed retailing forever. Just five years after the release of Apple’s first iPhone, retailers are able to engage customers on their own terms. Gone forever is “Clonetown USA,” with its repetitive retail landscape. The connected consumer, armed with a world of information in the palm of his hand, is a very different beast today, and retailers need to keep evolving to outsmart the competition and thrive.

Recent statistics have shown that almost half of all phones are smartphones. Close to 30 percent of shoppers use mobile and social location-based searches on their smartphones every day, and that number is rapidly growing. One easy and effective way to search is with a Quick Response (QR) code—lucky for retailers, over one-third of all QR code users are prepared to supply their age, sex, or ZIP code. And this isn’t a onetime query. During 2011, frequent scanners—those using QR codes more than 20 times—grew from the year before by a phenomenal 350%. Whichever way you look at it, the connected shopper is here to stay.

Many have taken this trend to ominously forecast the death of traditional stores. But to paraphrase Mark Twain, rumors of the death of retailing are greatly exaggerated. The smartphone, once seen as retail’s biggest threat, is now shifting power back to traditional retailers because of the insight that can be gained from smartphone users themselves.

It is true, however, that all the hard work a store owner has done to optimize the price, quantity, and mix of merchandise can be lost if the shopper in the store is driven away by an online offer or a better price in a nearby store. How does a retailer respond? Follow the smartphone user—add better information and location analysis to the enterprise. The very data the customer uses to compare prices is a source of intelligence to improve offers to deliver better choices and service to the in-store buyer.

QR codes, the most common way to obtain pricing from stores and online sites, can be used by savvy retailers to personalize data and highlight the benefits of shopping in a store rather than online. Better still, retailers can borrow from “bump to share” digital advertising to get a customer to download special in-store coupons and discounts via applications so that they know who customers are and what they want. Retailers can differentiate their stores from competition through better product availability, educate customers on complimentary products, and provide time-sensitive offers that appeal to specific needs and wants.

As retailers gain more insight into who is using their stores by connecting their customers’ clicks to bricks, the online to offline experience, they will improve merchandise assortments so they are tailored to local tastes and market potential. Adding real-time data that is accessible from enterprise systems and connecting it with location-based data (which products are available where and which customers are shopping where) will enable retailers to make quicker decisions on pricing and product discounting. Improved assortment and price optimization can also be delivered by hyperlocal customer insight. If retailers want to deal with the connected consumer, they’re best served by copying them—getting the best local information. It’s truly the edge over nearby competitors.