Retail Indoor Location Evolving Beyond Proximity Advertising and Dedicated Apps

The market for indoor location technologies in retail, which include BLE beacons and Wi-Fi, continues to grow strongly with installations set to break 200,000 stores by the end of 2016, forecasts ABI Research. Though costs to deploy and manage an indoor location solution in a store are low, retail has yet to see an app or deployment that utilizes the technology and captures the imagination of the public at grand scale. ABI Research predicts that a shift away from traditional retail apps and proximity-based advertising will unlock the true capabilities of indoor location technology in retail.

“Retailers remain trapped between the need for an effective mobile strategy and a failure to drive app adoption, with in-store app usage remaining below 10% for many,” says Patrick Connolly, Principal Analyst at ABI Research. “App fatigue is a reality for many consumers; the last thing they need is a separate, unhelpful app for every store they visit. As a result, some retailers are reconsidering the viability of mobile apps altogether.”

Retailers’ inability to increase usage of their apps is creating a chicken and egg scenario, finds ABI Research, as the iBeacon standard requires an app to work. Location-based initiatives like Google Nearby can help change this dynamic by removing many of the frictions associated with retail apps.

“Google Nearby enables retailers to embrace highly focused, task-based micro-apps and web URLs, both of which prompt the user to access hyper-relevant content based on proximity and relevancy,” concludes Connolly. “Another approach is to centralize engagement in a commonly used app like Facebook or WeChat. In place of traditional store apps, these solutions remove the need to download or remember apps; any store offers and deals that are pertinent and close to the individual consumer’s current location will be immediately at his or her fingertips. Along with start-ups like Unacast, these companies are also best placed to evolve the proximity advertising market toward attribution, retargeting, and chatbots, which can drive significant revenue for all parties.”

In terms of types of indoor location technologies, BLE beacons are still catching headlines but Wi-Fi recently re-established its market importance, with startups like Cloud4Wi and Euclid achieving great success and Purple and Zenreach receiving significant funding. Analytics is the major market driver today. With handset-based location solutions emerging from Apple, Google, and others, as well as attribution and retargeting, Wi-Fi is set to re-emerge as an important indoor location technology.

These findings are from ABI Research’s Indoor Location in Retail: Where is the Money. This report is part of the company’s Beacons, Indoor Analytics & Location, Enterprise IT & OT Convergence, Transformative Technology, and Semiconductors sectors, which include research, data, and analyst insights.