5 Ways Forward-Looking Retailers Are Using Location Technology and DataAugust 24, 2018Location DataBy: Vivian NguyenShare: TwitterFacebookLinkedInEmailLearn why progressive retailers are relying on the use of location technology and data to make confident business decisions.The constant bombardment of advertisements on digital platforms makes the narrative ‘brick-and-mortar retail is dying’ easy to believe. It’s even more believable when established players like Toys R Us, Gap, and Walgreens start shuttering hundreds of stores. In reality, the retail apocalypse could not be further from the truth. According to the US Department of Commerce, more than 90% of all consumer spending in the first quarter of 2018 took place in the physical world.That said, the retail ecosystem is now more competitive than ever. Maintaining sales targets, let alone attaining growth, is never a guarantee. Which is why progressive retailers are turning to location technology and data to arm themselves with fact-based insights that would allow them to make decisions confidently.Location technology and data acts as a binding tool for disparate business information and helps retailers get a clear and complete picture of their business landscape. The intelligence derived from highly-granular location data can help businesses understand which areas have the most potential and how buying behavior is changing over time.Here are five ways location technology and data is helping retailers achieve higher returns on their investment:1. Customer ProfilingFor businesses looking to get their offerings in front of the right audience at the right time, customer segmentation sits on top of the marketing strategy. It’s no secret that people with similar cultural-economic backgrounds tend to concentrate in recognizable physical clusters. Therefore, banding together socio-economic demographic data with location technology can help retailers break down different territories by gender, age, race, annual income, language, education, etc., and identify their prospective clients with ease.Also, it is imperative to have a clear understanding of the specific customer groups that have helped the business to succeed in the past. Once it is known where the most profitable buyers are located – down to their address level – retailers can effectively allocate marketing budgets to pull in potential customers with similar tastes.2. Market AnalysisSavvy retailers slice and dice their store performance data when they are deliberating changes to increase operational efficiency. But, to get a true picture of the market, this information alone is not enough. Retailers must be aware of how their competition is performing in the same territory. They need to know if the median income in the neighborhood is increasing or decreasing. Is the population growing? What about employment rates? Mapping this data against store performance can help retailers make informed decisions about what items to stock in which stores and in what quantity – or even which stores to shutter or where to open more outlets.Not surprisingly, in a study which analyzed the differences in the performance of Wal-Mart and Kmart stores in the Greater Cincinnati Area, locational factors were found to be the key differentiator. The results revealed that the selection of store locations, accessibility, store attractiveness, agglomeration, and competition, contributed to the lower sales of Kmart, as compared to that of Wal-Mart. Which brings us to…3. Site SelectionWhen the biggest online retailer in the world, Amazon, decides to build a solid brick-and-mortar footprint, it becomes clear that the traditional site selection strategy needs a makeover. In 2017, Amazon acquired grocery chain Whole Foods because of the latter’s intelligent site selection model. With 400 store locations spread across 42 US states, Whole Foods is a prime example of how location data can be used to reach the target audience – in this case, affluent customers.Nonetheless, mapping the median household income for different neighborhoods only skims the surface of what location data can do for effective site selection. Businesses can also map factors like the location of competitors, nearby transportation as well as drive times for showrooms. And for zeroing in on the location of a warehouse or a distribution center, the availability of cost-efficient routes from the site would play an important role.4. Market PlanningMarketing and merchandise space planning are critical factors influencing the success of any retail business. By strategically adding location data to this mix, retailers can ensure that they stay competitive and boost both customer satisfaction and profits.For example, by overlaying business information like traffic, wait times, and queue lengths on a map, retailers can identify staffing demands at various store locations. Similarly, insights can be gained into products that regularly run out of stock. And timely resolution devised for items for which complaints have been received.Location data also helps to unravel critical market trends, such as the hotspots where offering discounts have led to maximum sales. Insights like these become all the more important during the critical holiday shopping season and events like Black Friday.5. Targeted AdvertisingOne of the most successful marketing tools adopted by forward-looking retailers is geofencing. The technique involves erecting a virtual boundary around a specific geographic area and then pushing out promotional messages to the target audience via digital means, like text or app notifications, as well as traditional vehicles like email or direct mail. Outdoor apparel retailer The North Face witnessed a significant spike in their in-store traffic when they fused the weather forecast with the location of their customers for a highly-targeted campaign. Other retailers who have tasted success with geofencing include L’Oreal, Starbucks, and American Eagle. So, if a retail business is not using geo-marketing to acquire and retain customers, it is simply helping the competition succeed.Combining location technology and data with business information and socio-economic demographic records allows retailers to formulate strategies aimed at revenue maximization and improved customer satisfaction. Those businesses who use location technology and data to support critical decisions about their physical network stand to succeed in the long term.That said, in a recent survey, 60 out of 100 merchandising professionals confessed to struggling with ways to leverage geographic and socio-economic data for targeted promotions and offers. If you are facing a similar problem, we are here to help. Contact us today to learn more!