How Location Data Can Help Retailers Win Big in 2019
Another year, another Amazon Prime Day shopping extravaganza in the books.
This year’s Amazon Prime Day was reportedly the company’s biggest shopping event to date, with shoppers purchasing more than 100 million products online. Again, consumer electronics were a top priority for a majority of online bargain shoppers: the e-commerce giant noted the Toshiba 4K Ultra HD Fire TV Editions (50-inch and 43-inch) are now the best-selling TV deals in Amazon history — together selling over six times as many TVs compared to last year’s record-setting Fire TV Edition. Amazon customers also stocked up on back-to-school and off-to-college season electronics, purchasing PCs and other computer accessories.
But it’s worth noting that on Prime Day, Amazon was not the only game in town. Competitors like Best Buy, Walmart and Target offered their own competitive deals to grow their own slice of the “Black Friday in July” ecommerce pie.
But how did these brick-and-mortar stores fare? Were they impacted by the ecommerce frenzy and if so, what lessons can be learned?
To understand more, Gravy Analytics used location data to measure consumer visits at 1400 retail chains for the two weeks prior and following Prime Day 2018 (and compared it to 2017 data). This kind of data, which reveals where people go and what they do there, provides valuable intelligence about consumer behaviors that can help brands plan, predict and take action. Our Prime Day Foot Traffic Analysis revealed that for some categories — particularly consumer electronics and cosmetics — brick-and-mortar shopping is actually alive and well.
It’s no secret that Prime Day was about big savings on electronics and home entertainment — made evident by Amazon’s record setting sales on TV deals under $300 — but one of the biggest takeaways from this year’s data was that when it comes to purchasing higher-end consumer electronics, consumers may prefer an in-person experience. In-store traffic to this category picked up, adding 5 percent over the average daily attendance rates for the two weeks prior. Why? Because for this kind of purchase, people like to see and experience the item up close, and imagine how it might look in their living room or man cave before opening their wallets. Clicking the online buy button simply doesn’t compare to the in-store experience.
Despite an increase to consumer electronics stores, foot traffic to mainstream electronics retailer Best Buy decreased. Our findings also suggest that while Prime Day particularly appeals to deal seekers, it's tough for brick-and-mortar retailers to compete on the basis of price alone. Foot traffic to discount stores and wholesalers also dipped, despite efforts to draw in more consumers with in-store deals. Costco, Walmart and Target all saw less foot traffic to brick-and-mortar stores on Amazon Prime Day 2018 than the previous year.
What do these real-world learnings suggest that discount and wholesale stores, like Target or Costco, or even electronics retailer Best Buy, do to mitigate against further loss of sales to online?
- Create a shopping experience. Whether it’s a special acoustic showroom to get the full-on sound system experience, or an in-store security system installation that lets customers try the system out on the floor, retailers should explore the opportunity to create an in-store shopping experience for customers that isn't easily replicable online.
- Avoid competing (only) on price. Competitive pricing is essential, but retailers should also look for opportunities to differentiate through service. Trained sales associates, in-store events, or in-home installation services all create reasons for customers to patronize — and spend more with — your business, instead of taking theirs to an online competitor.
- Get to know your customers better. Some of your customers are likely to be deal-seekers, but other customers shop for different reasons — and perhaps aren't as susceptible to Prime Day deals. Location-based insights can help retailers to better understand their most valuable customers (and find more like them), plus inform inventory decisions, product promotions, hours of operation and more.
By understanding where your customers go and what they do in real life, brick-and-mortar retailers can gain the advantage over their online competition. Location data can help retailers of all types understand the full customer journey, and determine where, when and if to add or displace stock, staff and amenities. While we don’t know what 2019 will bring, we do know that for retailers seeking to continue to drive traffic in-store in spite of major online shopping events, like Amazon Prime Day, insights derived from location intelligence and data should be front and center for any strategic planning.