Retailers: answer this simple question and make higher margins

June 15, 2017 Neil Egan

Vinod Kashyap, Director-Product Management, IoT and Indoor Positioning Solutions with Acuity Brands

Here’s a quick quiz show question: “What question do shoppers ask while in a retail store that can instantaneously increase retailer profitability?” Hint:  It is a question almost all of us have asked at some point. Before I tell you the answer, let me explain how all of this is connected to Internet of Things (IoT).  In a recent article I described the rise of a new breed of Omnichannel retailers which I dubbed “O-tailers.” These businesses are able to engage with customers across every channel including online, mobile, social and in-store.


Digital channels enable retailers to leverage shopper behavior online to better understand how customers search for products and interact with brands. Every click is a data point connected to the shopper profile that enables the retailer to provide product suggestions that are useful to the shopper, and therefore, are mutually beneficial when a shopper chooses to purchase the suggested item.  Often, those insights are lost in brick and mortar settings, where there has been no way to capture product search or customer movement data while in the store.

Enter Beacons

Ever since the 2011, when Bluetooth® Low Energy (BLE) was introduced to the world, many BLE beacon companies have leveraged this technology to create proximity beacons. These beacons have allowed forward-thinking businesses to enhance customer engagement by providing push notifications such as welcoming them to store, or providing some useful information to them via their mobile phone. This technology is available to retailers, and is being used in many retail stores now.

Often the mobile phone apps that interact with the beacons are tied to customer loyalty programs, exclusive offers and many other tactics that turn customers into repeat visitors. While this is an improvement in customer engagement at the physical store, it still falls short of the promise of achieving the same level of engagement as when the shopper is shopping online. Also, promotional engagements help retailers close sales, but come with a cost. Discounts and promotional deals cause a direct hit to a retailer’s profit margin (because they are not selling goods at full list price). These types of engagement strategies rely on the hope that a customer will purchase additional products beyond the discounted item, helping the retailer offset the lower revenue realized from the discounted item purchase.

Engagement is a two-sided coin

There is another type of engagement strategy that avoids these upfront profit margin losses but requires the right supporting technology for successful execution: Customer Driven Engagement.

One key advantage that brick and mortar stores have over e-tailers is that there is an inherent purchase intent. Shoppers have already done most of the heavy lifting by having a reason to travel to a store. This “need” for an item also means the shopper is more likely to pay full list price because the desired good is something he or she chooses to buy of their own volition, and not because of a discount.

The problem still remains that without the right technology in place, a physical store location may never learn what a shopper’s initial purchase intent is. Imagine a scenario where a shopper walks into a store and doesn’t see what they looking for. The shopper is under a time constraint and does not have time to walk around and search for an associate’s help. So the shopper leaves and the business has no way of knowing what product was “hidden” from the shopper and how to follow up with that customer, resulting in a lost sale. The shopper may also be frustrated that he or she took the time to travel to a store and could not find what they wanted.

The remedy lies in applying the right retail sensing and business intelligence technology in the store. Retailers need to digitize the physical store by allowing the shopper to search for items in the physical world – just as they do online. This is why Acuity Brands has created indoor positioning technology using the densely installed light fixtures as beacons to truly enable the store to be searched with an unprecedented accuracy of four inches.

And now the question …

This gets us back to our quiz show question – stores need to be able to provide a way for shopper to help themselves when they ask their mobile phone “where is ______?” (See video).  The retailer’s app should be able to provide a pinpoint location for the product search on a store map, as well as provide the route from the shopper’s current location. 

Providing this physical search capability in a store is an advantage for the stores over their online counterparts because the shopper who is looking for an item in the store, is highly likely to buy it, since they already made the trip to the store. Also, the shopper is looking for it because of a need, therefore, a discount from the retailer is not necessary. They are buying the product at full list price, as a result improving the profit margin for the retailer.

Customer’s intent to purchase can also be measured in store by their dwell times. When a customer dwells in front of a product for over a certain threshold of time, retailers have the opportunity to convert this shopper engagement into a sale. They can provide a push notification to their phone with a coupon, an engaging video, or some other information that closes the sale. With precise positioning, the shopper themselves can be searched for in a store. This is helpful when a shopper has a question to ask an associate, but cannot find one. By simply requesting for a store associate via their mobile phone app (See video), the store associate can find the shopper wherever they are in the store, as a result providing better shopping experience in store. Retailers will also benefit in this example since the shopper can continue filling their cart with additional items instead of taking time to wander aisles seeking assistance.

Engaging customers is not new in Retail since its inception of the store. Retailers need to grab the attention of customers with appropriate advertising and great products. However, with new technology like IPS, retailers can simply listen to the shopper’s needs and provide answers to their unique questions. IPS allows shoppers to engage with stores on their own terms and find the things they need more efficiently. No matter which type of engagement is in play, IPS technology presents opportunities for enhanced customer experiences that positively impact both retailers and shoppers.

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