With the omni-channel trend rising, retail and bank industries keep on looking for new ways to boost their competitiveness, and differentiate themselves with others remain traditional. Geofencing is one of key technologies practically utilized in Location Based Marketing. It is an application in a software program that uses the global positioning system (GPS) or radio frequency identification (RFID) to define geographical boundaries. Geofencing creates a virtual fence around a specific area= which could be flexibly defined based on the store catchment or ad campaign area.
How does it work? When marketing team decide to set up a campaign in high-foot traffic area for one or two months , to attract new potential customers to visit physical stores nearby. Traditionally, marketers would hire temporary interns to distribute hardcopy flyers during rush hours. Yet they never know whether the efforts are helpful or not. With geofencing approach, marketers can easily track events results.
Push discount favors when consumers walk into certain areas
Marketers can generate a defined-radius catchment around multiple stores all at once in the very beginning. They can even freehand draw boundaries within the territory of competitors in digital maps, and then schedule better daypart together or individually, to activate the digital marketing campaign in minutes systematically. While potential customers enter these defined geofencing boundaries at the right time, either near the stores of theirs or competitors, apps with embedded SDK installed in the smartphones will trigger the pop-up banner or message. These promotion ads notify customers e-coupon or discounted products, which would lure them to walk into stores. Additionally, marketers can further calculate redemption rate precisely in terms of visit counts of customers using these e-coupons in the back-end system.
On the basis of many authentic experiments and studies, geofencing LBS advertisement drives much more cost profit ratio than the traditional flyer distribution . Therefore, it is important to consider how to apply the application in your operation and marketing campaigns.
Fig. Classification of assessment location explanatory variables
Previously we have talked about what elements to look at when evaluating a retail site in a macro perspective. (Click to read more) Now we will formulate a location strategy of prospective sites into micro analysis.
Micro problem is the other main component of assessing a site location. Retailers have always understood location as paramount, but understanding all aspects of store performance, site potential in addition to consumer behavior demands a great amount of information. This involves an understanding of the geographical, demographic, socioeconomic, and competition data in the area. The figure above suggests a possible classification of assessment location explanatory variables. In opposition to trade zone evaluation (demand and competition), the site and store variables intend to evaluate internal factors or the new store offerings.
The retail sector is going through a restructuring phase, driven by factors such as increasing consumer mobility, increasing electronic commerce, changing household size, concentration of market power, market saturation, and changes in planning legislation. These changes require retail groups to invest strongly in stores of smaller dimension while focusing on a strategy that prioritizes proximity to the target customer and quality of goods and services. This investment has a long – run as well as smaller economies of scale, which forces careful decision-making.
ForbesChina has announced a ranking of best cities for business in China. Business development has expanded to tier2, tier 3 cities in addition to Beijing, Shanghai, and Guangzhou. Below are the top 20 cities.
From the outward growth of business focus we can find that either local or foreign enterprises have altered their network planning. How brand owners to prioritize their city expansion strategy in terms of business requirements is crucial to the future success of the firms. Benchmark your brand to competitors and prioritize cities with most potential to help you develop best market plan.
Crucial aspects for the success of smaller retail stores include location, dimension, services offered, and the targeting of specific market segments. Here we consider a phased decision methodology where we separate decisions about choosing geographic regions from choosing store locations within the region.
In the first phase, define the Macro Problem based on: strategic policy for a network, zone, or region where new stores will be installed; the number of units to be built; along with implementation timing.
In the second phase, make the final store-site choice by narrowing down a selection of available locations, usually with the help of real estate agencies. For this decision level, the number of commercial and academically published models suggests that researchers feel a need for rational and formal use of information.
The third decision level, concerning store and services design is the level most linked to the concept of service quality and customer satisfaction. Focus on models that take into account store location (level 2) and the physical design of the facility. Furthermore, some application can be extended in the store characteristics and services definition (level 3).
Tab. Decision levels involved in the expansion strategy of a retail network
China Resources Enterprise (CRE) has finalized acquisition with Tesco to create the largest food retailer in China by the end of May, 2014. The joint venture will combine Tesco’s 135 outlets in the country with CRE’s almost 1,000 stores, called Vanguard. Vanguard owns various business types such as hyper-marts, convenience stores, supermarkets and others. Among these outlets there are more than 250 hyper-marts. It is crucial for CRE to effectively carry out integration and store optimization plan after the acquisition.
To better execute store network optimization, brand owners need to fully understand market potential and penetration of targeted city. Reviewing performance of current stores and comparing actual performances against potential’s to get a clear picture.
Steps of SNO (Store Network Optimization)
Scorecard: to assess each branch and analyze competitor distribution
Channel optimization: overall planning of current stores (keep, improve, move or close)
Market expansion: site selection of new stores in terms of untapped high potential areas