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How Can Retailers Harness the Power of IPS Technology in Stores?
In the digital era, the role of physical stores in the customer journey is evolving. As online shopping has grown exponentially, stores are no longer just point-of-sales but key touchpoints where customers expect a unique and personalized experience. Amidst this transformation, indoor positioning systems (IPS) are emerging as game-changers, offering businesses an innovative way to create a highly personalized and efficient in-store experience for their customers.
In today’s modern retail sphere, shoppers and employees alike find themselves searching for items that are either misplaced or simply in an unexpected section of the store. IPS can help remedy these issues.
The potential utility of IPS technology transcends beyond mere navigation assistance. These systems can serve as invaluable data mines, offering insights into customer shopping behavior, preferences, and in-store movement patterns. By tracking the location of shoppers within the store, IPS technology can facilitate personalized shopping experiences. As customers move around, the store’s official app can send them targeted suggestions about products and deals based on their location. These location-targeted promotions can significantly enhance conversion rates and enrich the shopping experience.
“Gone are the days when we had to wander aimlessly through crowded malls, desperately searching for our favorite store. Thanks to indoor positioning systems (IPS), shopping apps are now equipped with the ability to guide us seamlessly through retail spaces.”
Utilities One
IPS-enabled apps can also be used to promote social media sharing of purchased items, wishlists, and other shareable topics. Additionally, the data from an IPS can improve store layouts based on customer movement, allowing retailers to strategically position popular items to boost sales. This provides insights into customer behavior, aiding in inventory optimization and data-informed decision-making, especially when combined with advanced AI.
IPS for Deciphering Customer Traffic Data
In-store customer traffic data can prove instrumental in optimizing product placement on shelves. IPS tracking can answer critical questions like:
- Where do customers tend to go upon entering the store?
- Do they favor certain sections over others?
- Are there any sections that customers typically avoid?
Answering these questions can help businesses make informed decisions on product placement, ultimately enhancing customer engagement and driving sales. Anonymized data usage is vital to ensure customer privacy, but the insights drawn from this data can be invaluable. Additionally, such data can give businesses a potent bargaining chip during negotiations with vendors. By showcasing the popularity of specific store sections, businesses can justify pricing for premium shelf space.
IPS Challenges: Hardware Infrastructure
To implement an IPS, the first hurdle to cross is securing the right hardware infrastructure. Essential components may include visual markers, Bluetooth beacons, Wi-Fi RTT, or ultra-wideband (UWB) devices. Target, for example, opted for Bluetooth IoT lighting systems in many of its stores. Customers using the Target app on their phones can access an in-store map to locate themselves and the items they are looking for.
Target’s solution involves placing Bluetooth beacons within the overhead lighting systems, thereby turning the entire sales floor into a vast navigation grid. However, this might not be the best solution for every store. Factors like store layout, size, and financial resources play a significant part in deciding the type of infrastructure to implement. While beacons can offer enhanced navigational accuracy, they can also be prohibitively expensive for some.
Worldwide IPS Implementation
One such company already on the move is Senion. Its StepInside technology has already been added to The Mall of America in Minnesota, the largest mall in North America.
“StepInside® indoor positioning system, allows us to offer step-by-step wayfinding, a more personalized visit that caters to the guest preference, and a way for visitors to more easily connect with our brands and attractions.”
Jill Renslow, SVP of Marketing and Business Development at Mall of America, via Business Wire
Senion’s IPS tech has also been installed in The Dubai Mall in the Middle East, the world’s largest mall.
“By incorporating StepInside, The Dubai Mall not only provides modern wayfinding to its shoppers, but also tools for retailers to better understand and connect with their customers. In a retail complex the size and popularity of The Dubai Mall, these tools dramatically change the way people buy and sell.”
Dr. Christian Lundquist, CEO and Co-Founder of Senion, via Business Wire
All in all, an IPS is not just about guiding customers around the store but also harnessing valuable data to create more personalized, engaging, and efficient shopping experiences. As retail continues to evolve, businesses that leverage these advanced IPS technologies will undoubtedly secure a significant competitive edge.
Discussion Questions
In the context of rapidly growing online shopping trends, how can physical stores leverage IPS to redefine their role in the customer journey? How can the data accrued from an IPS be leveraged in negotiations with vendors for optimum utilization of premium shelf space while still maintaining an engaging and customer-friendly store layout? Given the varying factors that influence the choice of hardware infrastructure for IPS, how can retailers strike the right balance between cost-effectiveness and the efficiency of the system? How might choices in infrastructure impact the effectiveness of an IPS and its subsequent customer perception and acceptance?
Poll
Loading …BrainTrust
Melissa Minkow
Director, Retail Strategy, CI&T
Nikki Baird
VP of Strategy, Aptos
While IPS systems may be able to enable personalized shopping experiences, privacy is still a key concern. In recent years, 13 states have passed data privacy laws, and more are expected. However, IPS systems still provide invaluable data, particularly when combined with sales data. As this can allow retailers to better measure the ‘conversion rate’ of their foot traffic to sales, and effectiveness of their merchandising efforts. Not to mention help optimize store layouts and potentially impact vendor negotiations. But they need to be unobtrusive. Be out of reach, so they can’t be tampered with – which could distort the data. They key thing when building a business case would be having a good understanding of the use cases you want to support, the data signals you want to collect (both to use now, and to enable training and testing of an AI model in the future), and identifying all the departments across your organization that could benefit, so you understand the true potential ROI of an IPS solution.
IPS systems have been evolving for many years and are now a core component, (in some shape or form), of most traffic monitoring systems. Using the data in aggregate is most likely the area to focus for most retailers given the long term risk of investing in areas that have privacy concerns and effort required to get customers to opt into many of the more personalized aspect. However, using the data in aggregate has a very large upside that retailers are just beginning to touch. One specific use case I recently came across was the ability for a retailer to increase the fees it was getting for placing key products on select end caps by showing the manufacture the actual foot traffic count of the end cap in high traffic areas. Also using IPS within the mall or even a broader area to track consumer patterns between store will be beneficial in determining product mix. I.e the customer spent 25 minutes in the footwear department of store 1 without a purchase and immediately went to another footwear store is a very telling indication
IPS certainly has useful applications, including guidance for customers when they are trying to find certain items. The intelligence provided to retailers is also useful as it helps them understand how traffic moves around the store. However, when it comes to location-based notifications in-store, I am really not sure most customers want this. Having phones beeping and alerting you when you’re trying to shop can be annoying and frustrating.
IPS is sexy, for sure, but this technology is not ready for prime time. Not from a price point standpoint, not from a technology standpoint and assuredly not from a user experience standpoint. My prediction is give it 5+ years, and maybe it will be ready then.
Retail is theater, and IPS gives retailers the ability to essentially tag their sets—and all the actors in them. As for the actors, we have store staff and shoppers. IPS enables communication and direction-giving. But, as most in our industry would be quick to point out, shoppers don’t want to be pushed toward deals if the messaging is intrusive, or worse: creepy.
Yes, the shopper-tracking benefits of IPS are powerful. Retailers have been searching for the ability to accurately map shopping patterns, dwell times, and conversion-driving factors in real time for what seems like forever. And now they can basically have all of these data points via IPS—if their store structures, technology infrastructure, budgets, and management resources all align.
So, is IPS important and worth retailers’ attention? Absolutely. Is it for every retailer with a bricks-and-mortar store? Not so much. IPS is really a mix of technologies that touch issues like privacy and vendor negotiations and customer experience. Every retailer needs to think hard about what’s right for them.
As a shopper. I am definitely not looking forward to yet another barrage of pinging as I cruise the mall or store. Between retail media and now IPS, the assault with messaging is sneaking up on overload.
As a retailer, I am fascinated with the opportunity to learn how shopping behavior within a given store translates into buying. What was the fixture to fixture sequence? And then what was the resulting purchase? Does one sequence lead to a bigger basket than other sequences? (Units per transaction?) Do purchases from one fixture tend to pull more units into the bag than purchases from other fixtures? How do different floor sets affect conversion per fixture? Sounds like a whole new data set to me. And it could help fine tune inventory productivity beyond current methodologies.
10+ years ago IPS technology was the talk of GlobalShop Expo. There were mannequins that talked to you via the store’s app, suggesting items and additional product that would go with what you had previously purchased. There were shelves that spoke to you at the grocery store, and beams to alert you to in-store deals. Beyond foot traffic tracking, none of it ever really became mainstream.
Rich and I conducted a live consumer panel that year at GlobalShop that began with a tour of the Path to Purchase products. One of the panelists comments stuck with me: “I want to date technology, I don’t want to marry it.” I get her point. The last thing I want when visiting a store is being interrupted by private Blue Light Specials as I shop.
I will be the first to say that understanding shopper behavior in stores is a big black box, that when opened, can drive really interesting insights – why does this section get shopped heavily but not this one? What would it take to get shoppers who go to this section to also go to this other section? But how you do it is important. Calling it “IPS” and lumping a bunch of different technologies – some way more invasive to privacy than others – I’m not sure that’s the way to go. Referencing a mall in a country that, most charitably, has a highly questionable human rights record and pretty low regard for privacy, doesn’t really help make your case. There are ways to do this without tracking phones or faces. The value proposition these days should be employee and shopper safety as well as a more shoppable store experience – not just a blue dot on a map. I have seen nothing new here, all the same challenges, and all the highly dubious ways of getting the data. All I can say is, until those are resolved honestly and openly, good luck! I don’t think this run is going to fare any better than the last 3 that have been made.
It’s funny, beacons were a hot topic many years ago and then kind of just faded into the distance. Getting consumers on board with downloading apps that opt into this technology is a large hurdle not to be underestimated in addition to the infrastructure it requires.
The entire IPS concept goes against the growth of online shopping and why it is so popular. In person shopping is all about wandering around, inefficiently experiencing one thing and then another as consumers expose themselves to different stores, products and people. The entire reason to physically go shopping is to create and enjoy this sensory environment that is anything but efficient.
As Georganne Bender so correctly points out we are talking about a technology that is over a decade old, so it’s safe to say the original IPS revolution never happened. The piece that’s missing from the question is, “Do consumers really want this?” I don’t want to be tracked, pinged, vibrated, or otherwise “engaged” when I shop, and I suspect I’m not the openly one. If there was a more clearly defined customer benefit this technology would be the standard in stores around the world. Since most shoppers aren’t clamoring for these “benefits” – which after all benefit the retailer and manufacturer far more than the consumer, we wouldn’t be answering this question.
Indoor positioning systems can offer customers and store associates great value, especially in malls and large footprint stores that are challenging to navigate efficiently. If you are a loyal customer for a mall or brand, it makes sense to download the app and opt-in to promotions and alerts. The challenge is to entice infrequent customers to download and engage with the app.
The barriers for successful implementation (infrastructure, privacy, opt-in apps, etc) make this a difficult solution to install and leverage.
I have been an information systems and technology advocate and practitioner over my decades in the retail industry. In-store systems fascinate me the most. However, IPS seems overkill for what is not a problem. When retailers offer the right merchandise at the right price in the right places (simple ain’t it?) ‘they’ will come.
For a few years now, indoor positioning systems (IPS) have been a hot topic of interest for helping users navigate indoor spaces where GPS is not available. It is important to note, however, that the application of this technology is much wider than appears at first glance.
On the surface, indoor navigation appears to be highly promising for user navigation. Increasingly, storefronts, offices, airports, and hospitals are realizing this. A mobile application called is being used successfully at the airport in Hong Kong. I think it’s a sign of what’s to come.
Navigating in-store is not easy. Getting the hardware right is the first step. Whatever the technology, whether it is Bluetooth, Wi-Fi RTT, or UWB, the platform must be in place.
I do not speak for, or represent Target, however, as one example, I believe that Target chose to implement Bluetooth systems in many of its stores. A Target app on a mobile phone allows customers locate their position in the store and find the items they need using a map.
From what I have heard, Bluetooth beacon was placed in the lighting systems above the sales floor. It is possible to find other ways to navigate a store based on its layout and size, however using beacons are pricy and not accurate enough. In order to utilize the infrastructure, software needs to be specifically developed.
IPS systems go far beyond helping guests shop. Customer data can be used for several purposes, including suggesting products to customers and tracking traffic in the store. – Db