Forkbeard helps physical retailers to better understand their customers’ preferences and subsequently optimize stores through granular insights, levelling the playing field between physical and online retailers.
Physical retail, from Goliath to David
Over the past two decades we have seen physical retail change from Goliath to David. Pre-pandemic grocery stores were the last major category in which physical retailers were able to keep a stronghold. However, post-pandemic this stronghold seems to be crumbling judging by growth rates of online and instant grocery delivery startups.
Data, the ultimate advantage
There are many answers to the competitive advantage of online retailers. Lower operational footprint, bigger product choice and no closing times, to name a few. However, one can argue that the ultimate advantage lies in the data online retailers collect. At the core of the ecommerce’s data advantage lies the ability to see and measure the entire customer purchase path with surgical precision: (1) who visited the site; (2) which category pages were viewed; (3) which products were considered; (4) which products were bought. However, in addition online retailers see who did not view and purchased a certain category and product. This provides them with an accurate understanding of customer preferences and gaps in store performance, allowing for fast and data-driven optimization of their store setup. In contrast, physical retailers see only (1) and (4), at best. They see how many customers entered the store, who they are and what they have purchased (e.g., with the help of loyalty programmes). However, they are unable to understand which aisles, categories and products the customers were exposed, and more importantly, not exposed to. This leaves physical retailers with an incomplete picture of their customer’s purchase path and hence, underoptimized stores. While physical retailers have sporadic optimization, the online retailers improvements consistently compound overtime and lead to a strong competitive advantage. Below a simplified visual that drives this point home.
Levelling the playing field, closing the data gap
To compete, in-store managers need the same data and tools to rapidly test and optimize all aspects of their store. More specifically, they need to understand the entire customer purchase path: (1) how many people came into the store; (2) how many people walked into an aisle; (3) how many people passed a category; (4) how many people engaged with a category; (5) how many people bought a product from the category. Once this data is available, store managers can experiment with the store setup, measure accurately the impact on exposure, engagement and closure rates, as well as optimize their store just like ecommerce does.
While online shops rely on cookies, Google Analytics and Search Console for their purchase path data, to name a few, physical retailers can use Indoor Positioning Systems (IPS). With GPS neither functioning nor accurate enough in indoor settings, IPS technologies track the movement of smart devices and their carriers indoors. For example, Forkbeard’s technology allows physical retailers to record customers’ purchase paths through a GDPR-compliant app on the customers’ smartphone which is often integrated into the loyalty app of the store. Alternatively, for slightly less accurate results but faster deployment, the store owners can use Forkbeard’s tags attached to shopping carts. As customers travel through the store, Forkbeard’s technology records the purchase paths via phones or tags and makes it available to the store managers in real-time.
Fighting back, optimising physical stores
Understanding the customers’ purchase paths and closing the data gap between physical and online retailers is only the means to an end. The main purpose of gaining these insights is to lower cost and increase revenues through optimization of store layout, product portfolio, promotions and staffing. Below is an overview of use cases that can positively impact the physical store’s bottom line by leveraging IPS technologies and purchase path insights. However, in addition to these use cases, IPS technologies by themselves enable a multitude of applications that can be used to improve the customer experience. This is a strong advantage brick-and-mortar retailers have over ecommerce. The tools that online retailers use to collect data and improve the store setup, only benefit the business owners. Ecommerce customers do not receive any direct value from cookies or Google Analytics. Instead, with new privacy regulations and the requirement to accept cookies manually, customers are constantly reminded that they do not get anything in return for their data. In contrast, IPS technologies can directly benefit the users and the business owners, enabling a quid pro quo. For example, providing an accurate position (blue-dot) indoors, IPS technologies can enable a Google Maps-like functionality when enriched with a map and product planogram. Customers using Google Maps-like navigation features waste less time searching and store owners receive purchase path data in return. In addition, enabling customers to find products easily, reduces the friction of shopping at a new store, increasing the store’s customer base and revenue.
Physical stores are being increasingly disrupted by their digital counterparts. While there are several advantages ecommerce has, data is the one that matters most. The ability to see the complete customer purchase paths enables online retailers to understand their customer’s needs better and allows them to optimize all aspects of their store setup. These data-driven improvements compound over time and lead to a strong competitive advantage.
To fight back, physical retailers need to close the data gap. Currently, they are only able to see conversion data (who has been purchasing and what has been purchased) using loyalty programs. However, store managers are missing data on aisle, category and product exposure and engagement rates. Technologies such as Forkbeard’s indoor positioning system can close the data gap and enable a number of use cases that allow for store optimisation and positively impact revenues or costs.