Best Buy: Why in-store analytics are critical for survival

Build it … and they may come, but what do they respond to?

"Footfalls – The single greatest miss in retail metrics" was certainly one of our most popular blog posts this year. In Footfalls, we compare what online retailers track and analyze about consumer behavior, versus what little retailers know about consumers in their bricks and mortar stores. By virtue of design and infrastructure, e-tailers know everything about your behavior: where you came from, where you entered the online store, everywhere you clicked, your shopping cart, conversion rates and what was attached. By comparison, most big box retailers simply track if you broke the infrared beam at the door and entered their store.

There is an old adage in retail that it's all about location, location, location. Before the advent of ecommerce, store real estate was everything. Build your stores in the best locations and consumers will come. In today's omnichannel world of shopping any time everywhere, location is even more important. But, the location that matters most now is the "location" of the consumer, not the store itself. The critical questions today are: what is the location of the consumer, how are they shopping, what are they looking at … especially while in store?

Big changes at Best Buy – Perfect case study for in store analytics!

You had to be living under a rock to miss all of the changes happening within Best Buy stores. Samsung has literally been rolling out dedicated store-within-store spaces to showcase their products and integrated technology. In the meantime, Microsoft is collaborating with Best Buy to do a "Windows Makeover" of the PC department in Best Buy's top stores.

So the question is: how are consumers responding? Do they go to the feature displays at Samsung and Apple tables first? If they go to the Windows PC aisle, do they tend to buy more of a solution with more things in their cart? If Best Buy advertises a feature product, do more consumers tend to go to that display … do make a purchase? These are not trivial questions! They are the lifeblood of retailer profitability. Consumer flow and purchase behavior inside stores is absolutely critical to Best Buy's survival.

Meet iInside – An in-store tracking intelligence solution at the meter level

Since writing the "Footfalls" post, I have had a number of people provide me with examples of how retailers are quickly moving beyond simply tracking footfalls at the entrance to the store. One of the most popular techniques is location tracking via cell phones. Retailers can literally track if consumers are in the area. If shopping in their stores, they can track and offer promotions via cell phone location tracking. For consumers with smartphones who opt in, this can be very effective. But how do you track allconsumers?

I met Kellie Peterson when I spoke at the Retail Customer Experience Executive Summit. She introduced me to her company iInside. iInside specializes in location services, and retailer store traffic tracking solutions that are both inexpensive and privacy compliant. I encourage you to go to their website www.iInside.com to learn more about their technology. One of their solutions involves a "position node" about the size of a deck of playing cards. These nodes can be discretely placed within displays and customized to record traffic in space zones from 3 to 30 feet. So, using these nodes at a feature location or end cap, a retailer see how many people visited and what the flow looks like by day, by hour, by store.

Just as importantly, these kinds of tracking solutions can be used to track consumer queues and wait times in line, which have a critical impact on shopping cart abandonment and overall consumer satisfaction. In short, the retailer is no longer flying blind. They can literally measure the flow and impact of a specific event at a given time of day.

There is no excuse for lack of data — The key is actionable intelligence

It is quickly becoming apparent that there should be no excuses for not having consumer behavior and traffic data inside retailer stores. If retailers tap into consumer phones' location data, and harvest loyalty data, they now have as much consumer-specific information as the online retailer. But, that can be expensive technology involving "Big Data," with potential consumer privacy concerns. Solutions like iInside illustrate that there can be very powerful consumer tracking and intelligence all the way down to a square meter of floor space. More importantly, these solutions are relatively low cost, and can be configured quickly to provide real time dashboards.

Data and in store intelligence are necessary, but not sufficient to produce results. The key is asking the right business questions to align the data with the critical outcomes. For example:

• If we invest in a promotion/ad, do people actually go find the offer in store?
• If a featured product is put on an end cap, do consumers stop and dwell there?
• If we have a product demonstration, do people go there … how long?
• How many people are on the race track, but never explore the rest of the store?
• If more consumers stop more places to shop, do they put more in their cart?

Running retail stores is an extremely expensive business today! Changing store designs is not only expensive, but making commitments to a Samsung store within a store is quite literally a life and death decision.

Again, I have no idea of how Best Buy might be measuring consumer behavior within their newly designed stores. From what I've observed on my shopping visits, there are some very different patterns and experiences depending upon what areas of the store the consumer visits first. And, they are not consistent across stores!

Traffic X Conversion = Sales … Engaged Consumers = Profitable Market Basket Attach

There is much discussion and debate about the retail store of the future. Best Buy's new store initiatives are literally a case study unfolding today. One thing is becoming abundantly clear … in the retail store of the future, the location that matters is the location of the consumer in the store. If retailers can't track and analyze traffic at the square meter level of space, they are flying blind on developing critical intelligence to measure the results that count … especially ROI.