The retail industry is a leader in acquiring proximity marketing technologies. We took a look at the state of proximity technology in retail in Q1 of 2016 and have decided to revisit the vertical in greater detail in 2017. With the insights from 388 Proximity Solution Providers (PSP) from 52 countries, we evaluate the current situation, look at general trends, and give an overview of the proximity use cases in various segments of retail.
The Situation in Retail
Brick-and-mortar retailers face challenges. The growth of e-Commerce and increased availability of information have tremendously changed the consumer’s path to purchase. About 67% of online consumers in the US search for additional product information online before making a purchase. A steep and persistent drop in store traffic leads to decreased sales. According to the US Department of Commerce, the US department store sales have declined by 31,2% from 2005 to 2015.
However, retailers who use location data in their marketing strategies gain huge advantages over the competitors. Proximity solutions enable retailers to get a real-time overview of the customer behavior, adjust strategies accordingly, increase engagement, and boost sales.
Omnichannel retailers with implemented proximity solutions can step even further. Collecting the data on in-store and digital habits as well as receiving information about the customer’s location allows to enforce purchases through personal notifications, targeted advertising, and exclusive offers. For example, a customer researches for a certain electronic appliance from his/her smartphone. Later, he/she goes around the town to do her regular duties. Once the customer occasionally enters a certain location, he/she gets a coupon offering a 10% discount on the item that was researched earlier. Conversion rates in such cases are incredible.
5 Key insights from the report
- 75% of top 20 U.S. retailers have implemented proximity technologies
- Smartphone users strongly rely on their devices to do shopping and are willing to share their location in exchange for special offers, therefore, retailers who implement proximity technologies get huge advantages over competitors
- Through proximity technologies, even retailers from “struggling” segments (e.g. book retail) can transform their business from having negative profits to an operating profit of 9% with a ROI of 175%
- Proximity marketing is not only for big-box retailers: small/medium-size businesses can increase an operating profit by 8% with a ROI of 365%.
- As of Q1 2017, 14,486,000 sensors are registered to have been deployed globally, 11% increase compared to the previous quarter: beacons account for 65%, Wi-Fi points - 20%, and NFC -15%.
Next week we will be diving deeper into how proximity technology is actually being used by retailers in practice. We’ll also look at who those proximity providers are. Stay tuned!