Shoppers are getting more used to the idea that when they visit that stylish high-street outerwear store with an urban feel, it likely ‘knows’ they’re there. Location-based technology ("LBT") hands retailers a way of merging their physical presence with their digital one, which meaningfully improves the overall customer experience, if not the wider omni-channel strategy. But the technology has been around for a few years now, and there are still some growing pains.
Who will fund LBT?
In the development stage, tech firms need money. For the whole effort to be worthwhile for them, the clever start-ups with beacon tech, which retailers often rely on to communicate with shoppers’ mobile apps, need clients whose user base is rather large or at least on its way there. This narrows the market and forces developers to increase prices in order to sustain their business.
A question of privacy
Retailers are also up against the difficulty of consumers’ reluctance to use location services on their mobile devices. Skyhook Wireless, a Boston-based outfit that applies location data to boost customer understanding, published a report in 2015 that indicated 40 per cent of app users don’t share their location or hesitate before they do. Half of these users cited privacy concerns.
When asking customers to reveal their location, what is the value exchange? A good many of us struggle to see what we get out of it beyond giving up personal data. The choice for retailers, then, is to communicate explicitly about what is being collected or face losing consumer trust. And even then, customers need to see the benefits.
Part of LBT’s rather vast potential, which itself depends on sufficient infrastructure, is tied to the rise of personalisation as consumers come to expect their shopping experience to reflect an increasing relevance to themselves. Personal interactions with the customer inform business practice: you figure out what the customer likes and then you deliver.
As e-commerce transaction volume remains firmly on its upward trajectory, the easier predictions are about the struggles of bricks and mortar. But according to Pierre Audoin Consultants, an independent European IT and digital research firm, 73 per cent of leading European retailers expect physical stores will become more strategically important by 2020.
It may come down to execution. A 2016 report from Adobe on digital trends had half of retailers holding the view that in-store geo-targeting technology is ‘somewhat effective’. The dreams of shoppers and retailers alike are usually made of stronger stuff.