Here’s How Geofencing Helps Brick-and-Mortar Stores Compete in an Increasingly Digital World

By enhancing the in-store experience

Using geofencing to deliver an in-store 'cool factor' can have a major impact on sales. Getty Images
Headshot of Molly St. Louis

The holidays are upon us. It’s that special time of year filled with copious amounts of fruitcake, ugly Christmas sweaters and–in some households–ongoing conversations about retail sales at brick-and-mortar stores vs. online.

Yes, every November as Black Friday looms on the horizon, reports begin to appear about how online sales are mopping the floor with physical locations, or how brick-and-mortar stores are making a comeback. It’s as if the two sales facilitators were arch enemies, like Mr. Snow Miser and Mr. Heat Miser from the old Claymation Christmas days. This year has been no exception.

The National Retail Federation reported that 2017’s Black Friday weekend saw an estimated 108.5 million online shoppers, which was 9 million more than brick-and-mortar shoppers. This year, consumers spent a record $5 billion dollars online in 24 hours the day after Thanksgiving, yet again, beating brick-and-mortar sales by a landslide.

It is important to note, however, that brick-and-mortar sales are nothing to sneeze at. In fact, despite the rise of ecommerce, they have either remained the same or increased over the past couple of years, with more than 90 percent of consumer spending still happening in the real world, according to U.S. Census data.

Forced to step up their game by online sellers offering convenience, brick-and-mortar stores can’t be outdone when it comes to the human element. One of the major reasons that in-store shopping is still very much alive is down to the retailer’s commitment to improving the customer experience. And one of the most powerful tools they’re using to do this is geofencing.

Geofencing incorporates GPS or RFID technology to generate a virtual boundary in a certain geographical location, which then enables software to trigger a response when a mobile device enters or leaves a certain area. If you’ve ever visited a nearby Starbucks based on an ad you were served while using Waze, you’ve been a happy victim of this technology. However, geofencing marketing’s success doesn’t solely rely on its ability to drive customers into physical locations. It enhances their in-store experience as well.

Delivering the cool factor

“When a retailer decides to geofence their store locations, they need to figure out ways that enhance the in-store shopping experience, instead of focusing solely on driving foot traffic,” says Roger Woods, director of mobile product and strategy for Adobe. “They should start with promoting customer satisfaction and loyalty and, over time, this is the best way to influence more people visiting the store.”

Using geofencing to enhance the customer experience by delivering an in-store “cool factor” can have a major impact on sales. Home Depot, who utilizes Adobe Experience Cloud, is a prime example of this. Using the Home Depot app, shoppers are able to walk into a store, switch the app to “in-store” mode, and gain access to helpful features. The Product Locator, for example, is a mapping function that helps customers navigate the exact store they’re in to find their desired product. Other features include barcode scanning, price comparison and an image search, allowing shoppers to save time and find similar products. They also get their digital fix, while socializing in the real world.

Woods explains that the customers’ deep use of the app in-store fosters brand loyalty. “Next time the customer needs to order something, going online (either mobile or desktop) becomes a consideration,” he says. “And shoppers might blend these experiences as well. Home Depot sees around 45 percent of online transactions picked up in-store, for example.”

Timing special offers to enhance the customer journey

It’s no secret that avid shoppers love to get a deal and expert geofencing marketers are capitalizing on that. According to a recent study by TSheets, 84 percent of people who received a special offer through geofencing actually used it. That’s a mind-blowing statistic for marketers used to typically tepid conversion rates.

Timing specials to the customer’s individual journey can help give businesses the biggest bang for their buck. Shopkick’s CMO, Kristy Stromberg, points out, “The best use of geofencing, or proximity technology in general, benefits both the shopper and the retailer equally.” Meaning that the shopper is informed of special offers or deals and the retailer receives a notification when they physically enter a store location. The shopper then opens the store app and begins a dialogue with the retailer.

“Now that the two parties are connected, the retailer can offer the next proximity based offer and so forth, ultimately leading to an increase in basket size,” says Stromberg.

Shopkick’s fashion retail client saw tremendous success with location-based rewards. Once shoppers were driven into the store and opened their apps, they received rewards just for visiting. The retailer could also layer on secondary offers by placing beacons in the dressing rooms, giving consumers even more incentives by trying on their items and turning shopping into a game.

“The secret sauce was our digital breadcrumbs, the rewards currency shoppers earned for each action making it fun for them,” shares Stromberg. “To the shopper all of this was magic. They were receiving the right offer at the right time at the right place. The result was that the shoppers who earned these kicks (and tried on an item) converted [3 times more than] the shoppers who didn’t visit the dressing rooms.”

Cultivating a more connective customer journey

Improving the in-store experience through geofencing creates a more connective customer journey, which can impact customer conversion on all channels; it doesn’t matter how the sales are coming in. The fact is, they’re coming in.

“The point here is that none of these channels or technologies should be viewed in a silo,” says Woods. “Take mobile for instance, where brands have focused too intently on driving purchase behavior. The conversion rates on mobile may never rival that of desktop, and that’s OK. Activities that mobile shoppers engage in should be better optimized so that consumers who want to close the deal elsewhere have a great experience. The same can be said of location-based services.”

While we’ll probably never stop reading the old “Brick-and-Mortar vs. Online Sales” reports we’re bombarded with every holiday season, let’s be smart about them. These two customer touch points are not enemies engaging in a fight to the death. They’re on the same side and should be viewed as such. So, if you were looking for a happy, Christmas ending to this whole geofencing story, seeing these two rivals finally come together couldn’t be jollier than that.

@MollStLouis Molly St. Louis is a freelance writer for Adweek.