When Black Friday arrives this year, Matt Reilly won’t be fighting through the crowds at Atlanta retail stores.
Instead, the chief executive officer of Mogean, a two-year-old startup housed at Georgia Tech’s Atlanta Technology Development Center, will be observing passively collected data on shoppers all over the country along with the company’s co-founders, Nate Halsey and Reid Maulsby. Specifically, Mogean will analyze mobile data to see what shoppers are doing before they enter a store and after they leave.
“That’s the dark space retailers don’t see about costumers,” Reilly said—and it’s a space where Mogean hopes to provide valuable data that can lead to better marketing and ultimately, increased sales.
Meanwhile, CloudTags, another Atlanta startup, will be using ultrasonic sound technology to connect retailers with their customers inside the store, blending the digital experience with the physical retail space.
Both companies hope to develop richer, more in-depth consumer profiles so retailers can better engage shoppers and grab a greater share of the nearly $688 billion the National Retail Federation projects in sales this holiday season.
According to a survey from RetailMeNot Inc., an Austin, Texas-based digital savings website, 85 percent of retailers are investing more in their marketing budgets this year than they did last. Nearly 80 percent began their marketing earlier this year and more than three quarters of them are changing their holiday marketing strategy this year, according to RetailMeNot.
Part of that strategy involves boosting ever increasing internet sales. But such sales are still a relatively small percentage of overall sales.
According to the latest available figures from the U.S. Census Bureau, internet sales in this year’s second quarter topped $111 million. Overall sales totaled more than $1.2 billion.
So, shoppers are still going into stores—and that is where CloudTags, which works with Timberland, Dyson, Made, and Crate & Barrel, seeks to build a better experience.
With CloudTags, a shopper walks into a store and starts with a tablet to build out a list of their product interests. They are directed to an internet link that emits an ultrasonic sound allowing the list’s delivery to a smartphone.
“We’re using sound to connect users with all kinds of shopping experiences,” said James Yancey, CEO and co-founder of CloudTags.
He said the concept works best with luxury apparel, furniture, cars and home goods.
“Those are the best verticals where people engage,” he said.
Critically for retailers, the connection stays with the shopper when they leave the store. If they choose to buy an item from the list later online, credit still goes to the store and the sales clerk, Yancey said.
That’s appealing to physical stores, which typically don’t get credit for an internet sale. Retailers have believed for a long time that internet sales dampened store sales and have reacted by closing stores.
Yancey said retailers now are learning that closing physical stores can actually hurt their online sales.
“What they don’t know is that the sale actually starts in the store,” he said.
He noted that retailers are increasingly turning to pop-up locations to drive internet sales, particularly in secondary markets, where a typical location with long-term leases might never make sense.
Yancey said a clothing retailer, for example, may set up a shop with items but no inventory. Shoppers can get the tactile experience and later buy online.
“For them to just feel the fabric is a huge difference,” Yancey said, adding that the experience gives a shopper more confidence to buy online.
And then there is Amazon. The internet company has launched pop-ups around the country, including two in the Atlanta area—at Lenox Square and Mall of Georgia. Through those stores, Amazon is giving test drives for its Echo, Kindle, Fire tablets and Fire TV.
While CloudTags works with shoppers in stores, Mogean looks at data from more than 100 million users a month to build shopper profiles marketers can use to more accurately attract customers to stores.
Mogean collects and analyzes data from mobile applications that include location services. The company isn’t collecting personal data, just looking where an anonymous user goes and when.
“We assign patterns of life to people,” Reilly said.
For example, Mogean may see that a user grabs coffee before going to work, leaves for lunch, and stops at the grocery store on particular days before picking the kids up from school.
By building the pattern, “you can predict what may happen with the consumer,” Reilly said.
One goal is to make marketing more relevant to consumers.
“There’s so much junk you get hit with online,” Reilly said. “Consumers are just tuning out.”
Sending someone a coffee coupon in the middle of the day is pointless, he said. He noted that the idea would be to send the coupon 25 minutes before the person leaves the house.
“That’s actually useful,” Reilly said.
And the way to know that is through the shopper pattern that’s been constructed.
With any of the passive gathering, the longstanding focus on age demographics begins to disappear.
“Age doesn’t matter anymore,” Reilly said.
He said someone age 40 may be buying what 20 year olds buy and vice versa. Shopping groups will form regardless of demographic, he added.
Reilly used an example of work done for a smoothie chain. They watched as the consumers separated into two distinct groups—fit and healthy, and those who weren’t focused on a healthy lifestyle.
With one group, they would stop into the store and then go to the gym.
“The other group went to Wendy’s,” Reilly said.
By giving retailers and marketers better information to reach consumers, shoppers themselves may not need to fight the holiday crowds, especially on Black Friday, just to get the best deals for the products they want, said Reilly. And for him, that begs the question: “Is it necessary to do anymore?”