Are you aware of location analytics, but not sure what it could do for you?
How much has recent technology changed what can be achieved through location analysis?
Did you realise that you can now analyse what competitor customers do too?
This short blog explains the nuts and bolts, to clearly reveal what is accessible to retailers, and how you can use it to identify, quantify and target actual customer audiences.
What is location analytics?
Location analytics is the process of using data generated by actual customer interactions with a retailer’s physical and digital spaces to gain insights into consumer behaviour, preferences, and purchase patterns.
Tracking actual consumer movement over time with location analytics involves using permissioned data from consumers’ mobile devices or other location-tracking technology to understand how they move through physical spaces such as stores, malls, or entire cities. This type of analysis can provide valuable insights into consumer behaviour, including how frequently they visit certain locations, how long they stay there, and what routes they take.
How does location analytics work?
Here are the common steps involved in tracking actual consumer movement over time with location analytics:
- Collecting location data: to begin tracking consumer movement, data is collected from a source such as GPS-enabled smartphones or location beacons installed in physical spaces. This data can include latitude and longitude coordinates, time stamps, and other contextual information.
- Processing and analysing the data: once collected, data must be processed and analysed to extract meaningful insights. This may involve cleaning and normalising the data, identifying patterns and trends, and using statistical techniques to uncover correlations or causations. Blending this data with e-commerce data also enables greater understanding of customer behaviour between physical and digital spaces.
- Visualising the data: after analysing the data, visualisations are created to help interpret the findings. This may include heat maps, flow maps, or other visual representations of consumer movement and behaviour.
How does location analytics change the game for retailers?
Location analytics provides retailers with previously inaccessible information on how customers move to and from their stores, how often and where from.
But most crucially, the latest location analytics enables retailers to see the same information on their competitors’ customers.
This enables direct, head-to-head comparisons of customer behaviour and business performance.
Additionally retailers see how customers move through stores and interact with products, which can be used to optimise store layouts, improve product placement, and enhance the overall shopping experience.
Location analytics can bring benefits to every element of retail store strategy, including:
Store site selection
Site selection uses location analysis data to evaluate the right location for your business based on volume, frequency and dwell time of consumers to similar or nearby businesses.
Location analytics enables retailers to map predicted catchment areas based upon actual local customer behaviours.
Competitive analysis
Location analytics enables retailers to gain insights into their competitors’ performance by tracking visitor behaviour and visitation patterns at nearby stores.
Location analytics enables direct comparison of visitor volumes, frequencies, dwell times, times of day and day of week.
This data also enables mapping of competitor catchment areas and comparisons of local market shares.
This information can help retailers identify opportunities for growth and improve their own sales strategies.
Customer segmentation
By analysing customer origins (home locations and work locations) as well as purchase patterns, retailers can segment their customers into different groups based on their visitation and buying behaviour, preferences, and demographics.
This can help retailers tailor their marketing and sales strategies to better meet the needs of different customer groups, based upon where they live and travel from.
Understanding customer behaviour
Location analytics can provide retailers with information about how customers interact with their stores, such as where they travel from, how often, and for how long. It can also reveal where else customers are shopping, either in addition or instead of their own stores.
Retailers can see which areas of the store are most frequently visited, which products are most popular, and how long customers stay in the store.
This information can be used to optimise store layout, product placement, and promotions.
Marketing optimisation
Location analytics can also help retailers create more targeted marketing campaigns by providing insights into precise customer location (home or work) along with customer demographics, shopping habits, and preferences.
Retailers can use this information to create personalised promotions, offers and discounts that are tailored to specific customer segments and locations.
Enhanced customer experience
Location analytics can help retailers understand competitor customer behaviours and preferences, enabling them to modify their own offers and experiences to effectively combat local competition.
Location analytics can also help retailers improve the customer experience by identifying areas of the store that are causing bottlenecks or frustration for customers.
Retailers can use this information to optimise store layout, improve signage, and create a more seamless shopping experience.
Store layout optimisation
By analysing customer visitation patterns, retailers can optimise the layout of their stores to improve traffic flow and increase sales. This can include adjusting the placement of popular products, changing the location of checkout counters, and adjusting store hours to match customer traffic patterns and competitor behaviours.
Inventory management
By analysing foot traffic and sales data, retailers can gain insights into which products are selling well and which products are not. This information can be used to optimise inventory management, ensuring that popular products are always in stock and that less popular products are not overstocked.
Insights derived from location analytics help a business to make strategic decisions: with a better understanding of consumer behaviour, informed decisions can be made about things like new store location, store layout, marketing campaigns, and other strategies to optimise the customer experience and increase sales.
Overall, location analytics helps retailers improve their customer experience and sales strategies versus their competitors, and to directly grow market share as a consequence.
