Are retailers ready for location-based IT spending?

Several IT analysts are predicting that retailers will be utilizing digital and location-based marketing to better customer experience and sales.

Are global retailers getting ready to invest in location-based marketing that will use mobile, social media, analytics, etc.? ABI Research says indoor location technologies will be adopted at a rapid pace across all major verticals as a slew of new services and revenue opportunities emerge.

Berg Insight says about 150,000 shopping malls and major transportation hubs worldwide are likely to drive the market for indoor location platforms. The market for indoor location platforms and technologies supporting commercial services is expected to grow at a compound annual growth rate of almost 50 percent to reach €150 million by 2018.

ABI Research’s latest report — Indoor LBS: Applications, Advertising, and Revenues — says initially analytics revenues will drive growth creating a platform on which to build future advertising opportunities.

In 2014 a number of major retailers are approaching the end of their trial periods and we should start to see a step increase in deployments. iBeacons/BLE will also help to drive awareness and acceptance.

Checking the price tag of a blouse

“We can see how limited trials are showing increases of advertising local search CTRs from 0.1 percent to 3.5 percent, indoor location applications increasing basket sizes 10 percent, and how smartphones are significantly changing the cross channel shopping habits of users,” said ABI Research practice director Dominque Bonte.

Digital marketing

IT market research agency Gartner said companies spent 10.7 percent of their annual 2013 revenue on overall marketing activities, with digital marketing spending averaging 3.1 percent of revenue.

Yvonne Genovese, managing vice president at Gartner, said: “Annual digital marketing operating budgets is totaling 3.1 percent of a company’s revenue in 2013, as compared with 2.6 percent in 2012, representing a 20 percent increase.”

A recent Gartner survey said that 12.2 percent — the biggest share of their digital marketing budget — was allocated to digital advertising in 2013, just as in 2012.

In 2014, marketers plan to make long overdue expenditures for mobile marketing tools and techniques, said Gartner.

“We see the increasing activity around indoor location and mobile marketing by brands, retailers, and owners of complex venues as a clear signal that indoor LBS and location-enhanced marketing will drive the next wave of growth in the mobile LBS sector,” said Nitesh Patel, director of Wireless Media Strategies at Strategy Analytics.

More than 50 percent of American adults are smartphone owners, marketers are compelled to develop mobile strategies that ensure their products and services can be found, and purchased, by consumers on the go.

Most importantly, retailers now understand the need to address the newly emerging smartphone shopper.

ABI Research says analytics is a fundamental first step, but longer term, a combination of targeted in-store offers, hyperlocal search and in-application advertising will drive $5 billion in revenue in 2019, enabling retailers to better reach their customers both in-store and at home.

Mobile consumption

Big data company AdNear said data compiled from 650,000 India-based mobile users over three months showed that mobile users in Mumbai are more active on their devices compared to their counterparts.

Compared to the average time spent on mobile of 1.61 hours per user across requests, Mumbai travelers were 14 per cent more engaged, followed by Kolkata travelers at eight per cent. Bangalore travelers came up least engaged at 18 per cent less than the average.

Professionals were found to spend the most time on their phones at airports with an average of 2.2 hours, followed by Homemakers at an average of two hours.

Wi-Fi a growth driver

Richard Webb, directing analyst for mobile backhaul and small cells at Infonetics Research, said: “Telecom carriers are betting big on carrier Wi-Fi, but they’re also keen to develop ways of monetizing services so that Wi-Fi starts to pay for itself over the coming years. Wi-Fi roaming and location-based services are examples of customer plans that are growing fast.”

Strategy Analytics’ Wireless Media Strategies (WMS) report — Emerging Markets, Indoor Location & Mobile Advertising to Drive Future Mobile LBS Market Growth – said falling price points for GPS enabled handsets coupled with rising mobile data adoption will boost LBS adoption and use.

The adoption of mobile location based services such as maps and in-car navigation has been widespread in countries with both high smartphone and data plan adoption, and will spread to countries like India and China, where smartphone ownership and data plan adoption is rising fast.

Strategy Analytics’ Patel said: “In addition to the continued adoption of mobile LBS in rising mobile data markets, venue owners and brands are increasingly testing the capabilities of mobile devices to deliver enhanced customer experiences and engagement.”

Who’s scoring

David MacQueen, director of Media and Apps at Strategy Analytics, said: “HERE is the overall leader in terms of its mapping and location capabilities, followed by Google, TomTom and then Apple. HERE’s opportunity for growth have improved significantly with its horizontal strategy, following the sale of Nokia’s devices and service unit to Microsoft.”

Strategy Analytics said Google is the leader in business –to-consumer (B2C) LBS applications, as it benefits from preloading on most Android handsets, and is the most widely used map, navigation and local search app.

Apple remains in catch-up mode, although its high smartphone market share and acquisitions to enhance its LBS capabilities, such as Locationary, WiFiSlam, Embark and BroadMap, keep it a major player.

“Companies will roll out both handset-centric and network-centric location platforms, mainly based on a combination of technologies including handset sensors as well as Bluetooth Low Energy beacons and Wi-Fi infrastructure,” said Andre Malm, senior analyst, Berg Insight.

Many chipset developers, location technology specialists and handset platform vendors such as Broadcom, Qualcomm, Pole Star, SenionLab, Apple and Google are involved in the development of hybrid location technologies to enable indoor location.

Hybrid location technologies can fuse signal measurements from cellular, Wi-Fi and Bluetooth network signals, together with data from handset sensors like accelerometers, gyroscopes, compasses and altimeters.

Other companies are betting on new approaches. ByteLight uses for example the cameras in handsets to detect signals from modified LED light sources, while IndoorAtlas relies on the compass sensor to detect ambient magnetic field anomalies inside buildings. GloPos has developed a location technology based on mobile network signal measurements that can be used with any handset, not only the latest smartphones.

Baburajan K
editor@infotechlead.com