Technology Suzanne Gill predicts that communications and data management will combine to deliver special offers customised to one person, in one place, at one time
One day soon, the following will happen. My phone will notify a retailer that I have been inside one of its stores for more than five minutes. My loyalty card data will tell the retailer that I tend to buy one pair of shoes. An offer will then appear on my phone: 10% off today, if you buy two pairs.
This is big data. This is the result of a whistle-stop tour through unimaginably large quantities of material to pinpoint one tiny gem of highly relevant information. An offer this valuable will keep consumers off the internet and coming into stores.
Practicalities
Before that day, however, there are practical and legal issues to overcome.
First, the ibeacon technology described above is currently available only in the US. It also works only on iphones. When it reaches the UK, it will constitute an alteration or addition to premises, for which retailers will need landlord’s consent. Because ibeacons use Bluetooth, the Electronic Communications Code (“the Code”) isn’t relevant. Landlords will want to ensure that the ibeacons can be moved to accommodate works to the centre, and won’t interfere with any other systems there.
More widely available, Near Field Communication works on Android smartphones, but needs the customer to tap through to check for offers. The offer to the phone requires a good mobile signal inside the store – potentially also inside a whole shopping centre. Small transmitters, called femtocells, exist and can be installed subtly. But although the transmitters are small, they still constitute an alteration to premises and attract the protection of the Code.
Many landlords are wary of telecommunications apparatus in case it impedes future development. The reforms to the Code proposed by the Law Commission should go some way to alleviating landlords’ concerns. Even so, telecoms companies are unlikely to agree to a lease or licence that permits the landlord to move their apparatus around at will, unless someone else foots the bill.
The offer to the phone also requires better mining of loyalty card data than is generally possible today. Even internet retailers, who can record how shoppers browse before they buy, struggle to present appropriate offers.
Other challenges
The other issues for retailers relate to consumer trust and acceptance of use of big data. Vitamin supplements and hand sanitisers are often bought in the early stages of pregnancy. US store Target used this expenditure pattern to send a 15-year-old girl maternity offers before her parents knew that she was pregnant. While consumers love value, they are suspicious of an Orwellian Big Brother. Target is now reported to mix highly relevant marketing with more generic offers, and this has increased take-up of the highly relevant offers.
It’s a mistake to think that all retailers have the same pressures from the internet. Some retailers are already struggling to find stores large enough. Customers who browse online see all sizes and all colours of the available goods. When the customer walks into a store to try out an article or to try on a garment, he or she naturally expects to find the exact piece in stock. This is more of an issue for some retailers than others: an accessories client of mine describes its website as its largest store. But if consumers are confident that their item will be in stock, they will travel further than they used to. Retailers with smaller stores can promise to deliver goods to disappointed customers, either at home or at another store. (Which store counts this sale as turnover falling within its turnover rent?)
Shopping centres face particular challenges. Their marketing spend needs to generate loyalty to the centre itself, rather than the individual brands within it. But few shopping centres have a brand strong enough to attract customers to sign up to them. Centres that try to collect retailers’ data face legal issues from the Data Protection Act 1998 unless the data is anonymised.
Future possibilities
Looking further ahead, it’s logical that when a customer has redeemed their discount voucher for two pairs of shoes in store A, the centre’s ibeacon will suggest that they pop along the mall to buy a matching handbag from store B. On a practical level, this requires co-operation between competitors, which is commercially unacceptable at present, and stock control accuracy that retailers can only fantasise over. On a legal level, it creates another turnover rent conundrum: is the handbag sale triggered by the initial shoe discount?
Alan Thornton of creative retail marketing agency Madison Soho says that centres shouldn’t spend on new technology to the detriment of traditional marketing: “It’s a blend of the two that makes the experience of shopping in your centre better than shopping online.” Is this ibeacons, or someone to help carry your bags to the car? It could be both. The Ocado glass wall in Birmingham’s Bullring Centre is a great example of smart use of technology. Shoppers can scan a barcode from the wall using their smart phones and have the goods delivered to their home. There’s no supermarket in the centre so this represents a genuine addition to consumer choice.
New technology has huge potential to increase sales. Centre managers need to ensure that its use brings in new customers, lengthens dwell times and increases spend.
Suzanne Gill is a partner at Wedlake Bell LLP
