Editor’s note: As global distribution operations manager at Daniel Swarovski Corp., Richard Bezuidenhout has developed a location technology platform that helps drive sales improvements for Swarovski around the world. Here he offers his perspective on a trying time for retailers—and the opportunities lurking amid the uncertainty.

2020 has probably been the toughest year for brick-and-mortar shopping in modern-day history—and we’re still sorting out the full economic toll of the COVID-19 pandemic on retail business.

IBM’s annual US Retail Index study suggests that COVID-19 has effectively accelerated the shift to e-commerce by five years, boosting some businesses while nearly bankrupting others. Mall-based retailers, already limping due to department store struggles, saw earnings drop a stomach-turning 256 percent in 2020’s second fiscal quarter, according to Retail Metrics.

Other businesses—from grocers to home exercise brands like Peloton—have been unexpectedly overwhelmed with demand. Those with strong e-commerce strategies in place, or the ability to quickly pivot and deliver an omnichannel experience across stores, online, and social media, were poised to reap huge rewards. Amazon posted its biggest profit ever this summer, with 40 percent sales growth over the previous year; Walmart’s e-commerce leapt by 97 percent. Overall, online buying was up 45 percent year over year.

In light of these sweeping changes, a retail executive might be tempted to rip up the roots of their business model and institute hasty reforms. The wiser approach is to analyse granular details about customer preferences and remain agile in responding to them. Retailers who act on location-rich data to place products where customers are, then personalise the shopping experience to suit new habits, will withstand the COVID-19 disruption and excel in the post-pandemic era.

The Brick-and-Mortar Challenge: Meeting Customers Where They Are

Location intelligence—business insight derived from analysis via a geographic information system (GIS)—is central to this effort. Location technology can highlight Microtrends specific to one city avenue where a shop is located, or industry-wide changes that shape an entire national network.

With smart maps, business leaders can zoom in to a region or city and take the temperature of stores there through indicators such as customer relationship management (CRM) data, survey data, and demographic information. By juxtaposing those layers with data on online advertising efforts, for example, they can pinpoint where to deploy email blasts alerting loyalty group members to deals on in-demand products, tagged with current inventory numbers.

For a broader view, executives can use a GIS-powered dashboard to gauge the status of hundreds or thousands of stores coast to coast. A colour-coded system showing which stores are closed, open, or partially operating—overlaid with state and local business restrictions—can guide decision-making about how to readjust the flow of supply chains or where to reduce or expand the brand’s footprint.

By analysing data in a way that spreadsheets or PDFs can’t, location-savvy businesses can stay agile and develop techniques to serve them and their customers well in the post-COVID-19 retail era.

Today, it's much more data and analytics-driven than in the past. … You can do much better if you look at the data because you have a much more tailored approach toward the consumer.

Jochen Schmidt

Vice President, Distribution & Real Estate, Swarovski

The New Climate of Shopping

To paraphrase the 19th century American writer Mark Twain, reports of brick and mortar’s death are greatly exaggerated. There’s no question that consumer attitudes toward in-person shopping are changing drastically, and may never to return to “normal.” For example, the fashion retail brand Inditex, which owns Zara, plans to close up to 1,200 stores by the end of next year. Many empty, darkened boxes in malls and shopping centres may not see another retail occupant again.

Yet one of the insights of omnichannel commerce has been that physical stores do not cannibalise online sales, or vice versa. In fact, one can contribute to the other quite dramatically. An analysis of consumer credit card transactions from 2016 to 2018 found that a customer who spends $100 online will likely spend another $171 in store within the next month. By the same token, an individual who spends $100 in store will on average spend $163 online in the following 30 days.

There is still a primacy to brick and mortar that can’t be entirely replaced by a website, since stores evoke experiences and sensations that a website can’t. And certain products—like jewelry—benefit from a venue where they can be handled physically. But each brick-and-mortar location must evolve if it expects to engage more meaningfully with customers—becoming an experience hub rather than simply a point of sale.

Shoppers tend to spend more in stores than online as brick-and-mortar locations are more likely to catalyse spontaneous purchases, especially at a time when consumers are limiting trips out of the house. In store, customers are exposed to an array of merchandise that can be a chore to slog through in an online catalogue.

Still, savvy retail leaders know the challenge isn’t to pit one mode of customer engagement against the other, but to weave together online and offline marketplaces in a coherent and meaningful omnichannel experience. Now more than ever, executives need to analyse location-specific data to understand who walks into a store and who walks by, determining how to draw that person in.

Upgrading a Location Strategy

With corona virus infection rates and business rules varying significantly by state and country, a store’s location now has a heightened effect on its success and even its solvency. Agile retailers are analysing catchment areas in an effort to cope.

Ideally, retailers will employ a location strategy that is two steps ahead of where the virus is trending, allowing for swift changes. A store in Germany, where COVID-19 has generally been handled well, may need to be able to contend with shoppers willing to wait in lines outside. That same brand may need an entirely different approach to a store in New York City, which has been slow to return to normal levels of retail activity.

On a local level, this calls for a reassessment of catchment areas with the help of GIS technology, which can show how pandemic-related trends in pedestrian movement may be hurting or benefiting certain stores. As people change their daily routines to limit exposure and businesses embrace remote work and less office space, customers may no longer be where they’ve traditionally been. For instance, stores in financial districts that once relied heavily on shoppers from the commuter workforce now must adapt to new patterns.

Our own analysis of catchment areas shows higher footfall traffic and store traffic in small towns and smaller outlet centres than on main shopping avenues, where customers might formerly have spent a day. In response, retailers with slower high street locations can use location technology to analyse buy online, pick up in store (BOPIS) opportunities (also known as click and collect) in those outlets, while raising staffing levels and instituting stronger sanitation procedures in suburban locations that are seeing more business.

Innovative retailers using location intelligence won’t limit themselves to just in-store adjustments, either. For example, with normal exercise routines disrupted, runners have been clogging parks and riverside paths, creating new advertising opportunities for fitness retailers. Small details mined from location data can end up having a profound impact on a brand’s health.

If you look into the details, you'll see clearly the differences between parts of the city, and we start to adjust our assortment according to the demographics.

Jochen Schmidt

The Importance of Being Mobile

Some innovative retail brands are responding to the reality of COVID-19 by quite literally putting their wares where customers are—with pop-up stores, even operated out of trucks. It’s a trend that is likely to continue once the pandemic retreats, and a select group of retailers are perfecting it now. In India, denim companies like Pepe Jeans and Levi Strauss & Co. have responded to deadened traffic at traditional shopping centres by sending retail trucks out to residential areas. These mobile shops are equipped with comfortable work from home garments now in vogue, and can take customer measurements and arrange for items to be delivered after modifications. It’s the kind of agility and location awareness the moment calls for.

One of the most important steps a retailer can take amid these tightened economic circumstances is simply to make sure the right products and in-demand items are in the store. Best sellers should be right where shoppers can see them, and popular secondary items like accessories should also be close at hand. It’s an important retail technique that will outlast the pandemic—and one that can vary markedly by store location. Retailers can find other opportunities to connect with customers by analysing stores with high click-and-collect rates. Merchandise planners can determine which products are often shipped to those locations and identify a complementary product in store. Based on that information, on-site staff can show the complementary product when the customer collects the order.

Indoor location intelligence can play a supporting role. Typically used for maintenance management, HR planning, and security, GIS-powered indoor monitoring can help meet density regulations by tracking how many customers are in a store at a time, while also pointing to helpful data like which aisles or showcases are hotspots of activity. That might provide store managers clues about where to position attention-grabbing products. The technology can connect with mobile apps to help consumers navigate through a large store to the item they’re seeking, increasing safety and comfort for customers nervous about in-person shopping.

A Reshaped Retail Footprint

While many retail closures in recent months have been unavoidable, it would be a mistake for executives to retreat or panic without first studying the data. In many cases, removing a store means a brand is out of sight and out of mind for customers, actually leading to a loss in online sales rather than a gain.

For executives to fully understand the role, revenue, and potential shortfalls of each location, a GIS-enabled dashboard is essential. A smart map of this kind—relied on by retailers such as Walmart and Bass Pro Shops—can guide business leaders through difficult decisions about whether to shutter a store, or perhaps even open a location in an area of rising demand.

Brick and mortar is a super-strong element to build the brand, to communicate with the consumer, to show your brand in a different way. … It is important to have both channels, and we know there is a halo effect from offline to online.

Jochen Schmidt

Getting Personal while Staying Remote

Personalisation is also a key strategy to staying competitive in the age of COVID-19 and beyond, and it requires the kind of granular customer understanding that location intelligence supplies.

For example, a brand initiating an in-store sale or new pop-up experience will want to share that news with customers in the area. Adding a personalised detail to an email—pointing out that the store is just a 15-minute drive away and has implemented extra safety measures, for instance—might be the touch that produces new sales and provides the oxygen required to get a brand through the crisis.

Smart retailers also welcome qualitative information as a complement to data analysis. Collecting survey responses from store employees is an easy, low-cost way to assess an outlet in the new retail landscape, and one that can better link C-suite decisions to on-the-ground data. We hear a lot of talk these days about computing at the edge—it might behoove an executive to think of staff members as critical sensors who can pick up important clues at the edges of the physical store network.

An act as simple as having employees answer five or six questions at the end of their shifts can surface microtrends that highly paid consultants might miss. By collecting intel on what times of day were busiest, which products elicited most interest, or what price points people looked for, retailers can sense the shifting winds of commerce in a certain geographic area. More men are doing the shopping in certain sectors now—will they require a higher level of assistance, or does that pose new opportunities for upselling, if they’re not the typical shopper for that product?

Alternately, location intelligence might guide a retailer to tailor staffing to match people visiting the store, hiring a younger salesperson for the days and hours when college-aged customers frequent that location. This type of spatial intel has been part of corporate responsibility plans to increase racial equity as well, as retailers seek to ensure that their stores reflect their host communities.

If you don't have the right tools, you're putting your finger in the wind and hoping for the best. Using data, you minimise the risk of having a loss-making store.

Jochen Schmidt

Humanising Retail through Data

In an era of big data, a retailer can choose from many data providers. Reliable information is key to understanding current customer needs and possible future customers. Demographics including age, gender, income, and spending habits can be linked by GIS technology to a physical location or catchment area, helping brands identify opportunities and define actions.

Data analytics can often seem cold and clinical—but in fact, when data reveals actionable insight, it helps retailers create deeper connections with their customers. In ways both big and small, location intelligence helps brands meet customers on their terms in this unique retail era.

Consider the simple example of two stores in different regions where in-store capacity will rise from 4 customers to 20 next week. A smart map with integrated weather forecasts could reveal that one store will experience winter-like weather while the other will endure heat and humidity.

With that insight, the location-savvy planner can implement small gestures like setting up heaters or handing out cool beverages to make customers feel at home in the world of brick and mortar, at a time when trips out of the house can feel charged with anxiety.

Scale that across a full portfolio of retail locations, and those little things add up to a big difference for customers, giving location-savvy brands a competitive edge in a year of profound uncertainty and beyond.

This article was originally published in the global edition of the Wherenext

It’s an open secret in today’s retail environment: Unified commerce is as much about data as it is about shopping.

Best in class retailers are taking a hands-on approach to customer data—seeing it not just for what it is, but for what it becomes when combined with other data assets. These companies are integrating consumer insight with location data to discover new insight on where and how people shop.

In this NextTech instalment, we’ll explore a burgeoning trend that combines two established technologies to deliver competitive advantage.

Omnichannel, Fuelled by Data

The promises and perils of omnichannel retail are well documented. Executives have read enough incendiary headlines to feel the breath of change on their necks. Many came of age during a time of retail predictability and growth, and now face customers unsatisfied with traditional shopping and delivery methods.

Retailers who have adapted to this new model—or are progressing toward successful adoption—have more to thank than good instincts and innovative teams. Invariably, they have the tools and techniques to make use of their data.

Some, for instance, have segmented their customer base into core shopper profiles and are catering to where and how each segment likes to shop. Others have used location data and artificial intelligence to pinpoint the dollar value a physical store contributes to online sales in that geographic region—an important factor in predicting future revenue.

These insights emerge from the nexus of two technologies that have been key to retail success, but often exist separately: customer relationship management (CRM) and geographic information system (GIS) software.

The videos below offer a window into how a retail executive might use these two technologies to gain a competitive edge.

The Payoff: Smarter Channels to the Customer

The findings of recent studies suggest that omnichannel leaders are capturing more than just mindshare from today’s consumers. When the retail trade association ICSC analyzed $31 billion in consumer credit card transactions from 2016 to 2018, its analysts found that a shopper who spends $100 online typically spends an additional $171 in store within the next 30 days. Similarly, a consumer who spends $100 in store will spend approximately $163 online during the following month.

For many retail executives, capturing that spend is the greatest challenge on their agenda. In an omnichannel economy rich with data, the analysts who combine technologies to uncover customer insight will set the standard for success.

This article was originally published in the global edition of WhereNext.

The use of psychographics - which is about the ability to connect, persuade, and influence people - has entered the mainstream of high-stakes arenas, including the 2016 US political elections. But political strategists aren’t the only ones gravitating toward this form of big data analytics - leading companies are as well. 

Psychographics versus Demographics: What’s the Difference?

For decades, pollsters, product marketers, location planners, and others used US Census data to segment people who lived in the same geographic location. A typical demographic segment might include white females, 25 to 34 years old, with a yearly salary of $45,000 to $54,999. If that group were to make up a certain percentage of a city’s population, a high-end fashion retailer might open a store downtown.

But demographic data reveals little about those women’s interests or aspirations, and those are the characteristics that drive people to shop at a particular store or vote for a certain candidate. With that information, companies can target their marketing more effectively and avoid investing in less profitable geographic areas.

Psychographics broadens the scope from focusing on who a person is, to what that person believes in. Psychographics identifies lifestyle habits, values, attitudes, and other defining attributes.

(To explore the psychographics of your neighbourhood, enter a location in this Zip code lookup tool.)

Armed with psychographic insight, a car manufacturer that’s focused on sustainability can launch dealerships in areas where people prefer a green lifestyle. A bank scouting locations for its next branch might use psychographics to avoid overinvesting in neighbourhoods where people prefer online banking. A retailer will use psychographic data to identify cities with high concentrations of outdoor-recreation lovers, then stock stores appropriately and target ads in the social media channels where those prospects spend the most time.

Insight for the Taking

In a presentation at Columbia University’s 2016 Concordia Summit, Alexander Nix—of consulting firm Cambridge Analytica, the firm that consulted Donald Trump’s presidential campaign on psychographics - revealed a startling statistic. “We have somewhere close to four or five thousand data points on every adult in the United States,” he told the audience.

In all that psychographic data, there is insight, but that insight won’t arrange itself. Organizations like The Shopping Center Group are using GIS technology to chase it out.

“Clearly, demographics and geographics and economics will influence your world view,” Nix said in his presentation. “But equally important, or probably more important, [is] psychographics that is, an understanding of your personality. Because it’s personality that drives behaviour.”

This article was originally published in the global edition of WhereNext.