Retail investors who are equipped with up-to-date insights about location demographics through geofencing and other new technologies can stand to make better business decisions regarding their investment.
While the retail sector has experienced uncertainty around the emergence of online shopping and e-commerce, there are still many opportunities for growth within the on-the-ground retail sector.
The latest JLL report entitled ‘A Retailers Guide to the Galaxy’ reveals that emerging technologies and the ways in which retail investors can tap into the intrinsic needs of their customers, will mean the survival and flourishment of the retail industry for years to come.
According to the report, investors will see geofencing as an emerging trend in the next five years. The report also identified that the use of drones will have a small impact on efficiency and customer service in the next five to 10 years. These technologies will help retail owners gain a deeper insight and understanding into their customer’s needs, enabling them to deliver a better service.
What is geofencing
According to Tony Doherty, Head of Retail – Property & Asset Management at JLL Australia, “Geofencing is a virtual boundary that can be determined around any area or location. When a customer with a location-aware mobile device enters into the fenced area, geofence software collects data based upon the customer’s use and interactions with the area.
“For instance, geofencing can collect information about the customer’s age and personal demographics, where that customer has come from, times the customer has attended the store, items or frequency of visits and so on.”
“Retail owners can use this information to determine tenancy types, hours and day of operation based on customer needs, and address other ancillary issues such as parking and services, etc.”
How is the technology currently being used?
Geofencing is being used increasingly across the United States, according to the report.
Apparel retailer American Eagle Outfitters turned to geofencing to boost both its foot traffic and revenue at its outlet stores. It pinpointed shoppers who entered the geofenced mall parking lot and offering them promotions, which effectively tripled its sales.
U.S. food giant Taco Bell used geofencing to encourage customers to download its mobile ordering app, targeting the under-30 customer demographic and resulting in a six percent increase in sales.
Retail owners and centre operators are also using geofencing to enhance customer loyalty through mobile promotions and offers while it can also help retail owners understand where customers go before and after they visit a particular shop. “By acquiring these valuable insights, centre owners are able to make better tenancy decisions and gain better intel on the most effective layout for their retail malls to maximise revenue,” says Doherty.
According to a recent report by MarketsandMarkets, location-based services are forecast to grow to US$39.87 billion in 2019, up almost five-fold from US$8.12 billion in 2014 with geofencing heavily impacting this.
“Geofencing provides a better understanding of the retail sector per location. The effective interpretation and use of that important data can help on-the-ground retail stores differentiate their value offering from online retail and leverage revenue opportunities,” Doherty adds.
The impact of drones on customer service and efficiency
Like geofencing, the emergence of drone technology has potential benefits for the retail investment sector, according to the JLL report.
Drones can be used to collect information through video footage, which can help retail centre owners evaluate customer needs and demands at different times of the day. For example, retailers could use drones in warehouses and outside stores for security as well as to track shopper movement.
Drones could also circle store perimeters and parking lots while transmitting video back to the store.
Inside the retail store, drones can assist with everyday management activities. In fact, one top retailer in the U.S. filed a patent involving the use of drones for inventory management and product delivery, according to the report.
Doherty adds, “The possibilities of using drones to gather customer and retail intelligence are endless. They could help retail owners understand current needs and challenges as well as growth opportunities.”
With emerging technologies like geofences and drones, the future of on-the-ground retail has a refreshed purpose; to deliver value-added services to local customer demographics. Embracing these emerging trends can enhance your understanding of your target audience and inevitably result in a more profitable retail investment.
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