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Indoor Positioning Technologies as a Rising Force in Retail Sales

In this article, we explore why indoor mapping and navigation are turning into some of the hottest trends on the retail arena

March 05, 2020

7 mins read

Indoor location technologies have been around for a good while. It’s not a brand-new concept, nor is it something that consumers and companies haven’t come across yet. However, it is only recently that the market started growing at an increasing rate and it looks like we are yet to witness the triumph of indoor wayfinding and positioning solutions. According to a comprehensive research report by MarketsandMarkets, the global indoor location market is expected to soar to $44 billion by 2022.

In a broad sense of the word, an indoor positioning system is an array of sensors and smart devices that determine the position of people or objects inside buildings, where traditional methods like GPS or A-GPS become hugely inaccurate or fail to work at all.

The benefits of being able to reliably determine an individual’s position inside a large building, such as a shopping mall, are multi-faceted and we are going to look at them in detail in the following article.

Reasons for growth

In a world where everything can be bought on Amazon and delivered right to your door, one would think that the days of traditional shopping are numbered. However, this is not happening — or, perhaps, not as fast as some tend to believe. According to multiple studies, around 90% of worldwide retail sales are still made in physical stores.

This proportion is gradually shifting towards purely online shopping, but one thing is clear — traditional retail is not going anywhere. People still spend a lot of time at malls and leave 65% of their shopping budget in stores, not their browsers.

How we buy
Indoor Positioning Technologies as a Rising Force in Retail Sales
Source: Big Commerce

What’s changing is the very paradigm of the offline shopping experience. These days, shoppers often come to brick-and-mortar stores to finish the transaction they started online. Prior to entering a physical store, they may spend countless hours researching the market and narrowing their choice down to one or two options.

In the store, they just need to verify that they made the right choice and complete the purchase. Retailers are well aware of that and try to make their in-store experience as immersive as possible: almost a half invest equally in online and in-store technologies and around 20% favor in-store tech over online presence.

Because of this, businesses remain very serious about their retail stores and invest heavily in cutting-edge technologies such as indoor wayfinding, navigation, and positioning.

Indoor positioning system 101

The concept of complex indoor navigation and positioning systems did not come out of nowhere. Today, smartphone penetration in the United States, for example, is over 70%. In plain English, it means that 7 out of 10 people walking into a mall on a Saturday morning carry in their pockets a powerful device that uses 3G/LTE, Wi-Fi, and Bluetooth to connect to the outside world.

These signals can be used to accurately detect the position of a device’s owner and guide them through the maze of modern humongous shopping centers. From the technical perspective, a shopping mall navigation system can be implemented on either the client or the server side. The first scenario requires an app on the user’s device that will use the venue’s wireless infrastructure to determine its position.

As an alternative, positioning services can be placed on the server side, read data from multiple sensors, and use advanced algorithms to recognize Wi-Fi and BLE-enabled devices and calculate their coordinates. These solutions can use a variety of different technologies, including BLE (iBeacon), Wi-Fi, UWB, and others, to “see” shoppers’ devices and communicate with them.

From the technology standpoint, mainstream indoor positioning solutions can be broken down into several distinct types:

  • Based on Wi-Fi: this approach uses Wi-Fi connectivity to pick up signals from terminal devices, measure the signal strength and triangulate the position of the source.
  • Proximity-based (tags and beacons): relies on radio tags and beacons to identify the position of the signal recipient inside a building/store
  • Based on Ultra Wide-Band (UWB): a cutting-edge technology that uses ultra wide-band signals for extremely precise location detection
  • IR-based: the technology relies on light signals in the infrared part of the spectrum to communicate with terminal devices and reliably identify their location
  • Sonar-based: an innovative approach to location detection that uses ultrasonic sound pulses (undetectable by the human ear) to achieve a level of accuracy comparable with that of UWB equipment

As you can see, the market is rife with options that can satisfy any need and fit into any budget.

Indoor positioning: benefits for customers

The original purpose of in-store navigation was to bring customers to stores and create a much more personalized shopping experience, so it’s quite natural that customers are the key beneficiaries of all advancements in this field. Here are some of the key benefits that mall navigation and positioning systems offer to shoppers:

  • Ease of getting to the needed store
    Modern shopping supercenters are huge, with multiple levels and hundreds of stores. Traditional maps are not always intuitive and may occasionally be confusing. Having a simple app that guides you through the maze of aisles, passages, and food courts right to your shopping destination is an option that today’s shoppers really appreciate.
  • Ease of finding specific items
    Using advanced in-store navigation systems, loyalty applications installed on shoppers’ phones can bring them to the right shelf faster and help them tick more items off their shopping list. In case a particular product is missing, shoppers can instantly go online and order it from the retailer’s website.
  • Targeted ads
    Indoor positioning systems are able to send advertising messages to shoppers passing by and inform them about special offers or new products that are available. This way, shoppers can take advantage of offers that they would otherwise have missed.

Mall navigation systems add interactivity to the conventional offline shopping experience by throwing in features that shoppers expect to find online only. Just like a special-offer banner appearing on your screen while you are shopping online, a timely discount message on your smartphone while you are looking at a pair of new sneakers in the men’s footwear department may shift the balance towards a positive decision.

Indoor positioning: benefits for business

Indoor Positioning Technologies as a Rising Force in Retail Sales

Businesses also benefit from retail GIS, and not in a small way. A properly designed, implemented, and configured in-store navigation system can generate volumes of extremely valuable marketing data and boost sales. Here are some of the most direct advantages of GIS in retail:

  • Advanced visitor statistics
    Unlike traditional beam break sensors, an indoor positioning system collects an enormous amount of data: the number of visitors, individual and group visitors, average time spent in the store, departments visited, time spent in each department, and so on.
  • Indoor location analytics
    Knowing where people go and how long they stay there provides the mall management and store owners with valuable insights into shoppers’ behavior and enables them to optimize store locations and merchandising, as well as take measures to bring more shoppers to unpopular areas.
  • Store optimizations
    Combined with POS and inventory data, indoor positioning data helps assess the effect of layout changes, in-store rearrangements, marketing campaigns and other activities aimed at increasing conversions and stimulating sales.

As you can see, mall wayfinding and indoor positioning systems produce a dual effect for businesses. In addition to increasing traffic and generating a steady flow of ready-to-buy shoppers, they help generate vast amounts of highly valuable and relevant data to be used for marketing purposes.

Hurdles of IPS implementation

Every indoor positioning system is much more than the sum of its components. Besides the equipment, which includes multiple sensors and communication nodes, every GIS in retail relies on a powerful back end and user applications. On top of that, every system has to be fine-tuned and configured for the maximum operating range, accuracy, minimal interferences, optimal zoning, and much more.

All of this makes every IPS implementation truly unique and hand-crafted for a particular location, customer, and set of business goals. The software in an IPS is often based on existing products from companies like HERE, Shopkick, Micello, Microsoft, Cisco, Sensewhere, and many others.

However, these generic systems mostly serve as a foundation for the future custom system, and have to be deeply configured, customized or extended to address the unique needs of a particular business. This is where companies like Intellias step in and take over the development of a custom indoor positioning system and its deployment.

Our company has delivered multiple projects for the retail industry and offers a wealth of hands-on knowledge in the field of indoor navigation and positioning. With a team of GIS experts, we cover the entire range of services required for building balanced and effective indoor positioning systems and connecting them to powerful back ends with advanced analytical features. To top it off, we also build user-friendly mobile apps for indoor navigation.

We are well aware of the challenges and minute nuances of IPS deployment that may bring less experienced integrators to an impasse. As a soon-to-be-official HERE Technologies partner, we strive to give our customers the best tools to power their custom indoor positioning solutions and drive their sales upward.

Summary

If you are in the market for a custom indoor positioning system, choosing the right technology is definitely important. However, it’s not the hardware that ultimately defines the success of your project. It’s all about the software that reads data from multiple sensors and devices and passes it through a cascade of algorithms and transformations to detect the position of your customers, goods or employees with maximum accuracy and within the shortest time possible.


Intellias is an expert in retail software development services and will be happy to guide you through every step of the way: from getting your priorities right and picking the right technology for the job to making a pilot implementation and scaling it to multiple venues.

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