In-Store Wi-Fi and the Retailer’s Bottom Line

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In an effort to achieve the goals of fulfilling an omnichannel strategy and improving the customer experience, retailers have begun to fundamentally change the architecture of their store IT systems. Over the past few years, upgrading the communications infrastructure at the store level has become a priority, and it is a trend that will continue into the future.

That’s the general conclusion of the 2015 Store Infrastructure Study conducted by IHL Group. The study surveyed more than 100 retailers across a full spectrum of retail and hospitality industries regarding their readiness in WAN and Wi-Fi initiatives that play a crucial role in retailers turning their in-store vision into reality.

Thanks to this study, we now have hard data about the IT readiness of retailers and the value an upgraded communications structure has for the average retailer.

Status of Communications Infrastructure Updates

Retailers are spending a larger percentage of their budget on innovation. Historically, they have dedicated between 15% and 30% of their budget to innovative systems. On average, retailers are now dedicating 40% of their budgets to innovative systems, with general merchandise retailers spending 42%.

By 2016, 80% of retailers will have updated and optimized their WAN bandwidth to take advantage of their upgraded software architecture and enhanced customer experience options at the store level. Although only 40% of survey respondents have deployed Wi-Fi in their stores, 35% are planning upgrades in 2015.

In-Store Wi-Fi Boosts Customer Loyalty and Sales

An encouraging 28% of retailers reported that they have experienced a positive impact on customer loyalty as a result of offering in-store Wi-Fi. Moreover, this loyalty has translated into an overall 2% increase in sales.

The hospitality segment, 61% reported an increase in customer loyalty and a 2.7% boost in sales. These outstanding numbers led the IHL Group to conclude that Wi-Fi is an essential service in hospitality establishments. Not only do those establishments experience a bump in loyalty and sales, there is an adverse impact if they don’t offer Wi-Fi.

General merchandise retailers also enjoy the benefits of offering Wi-Fi with 22% of respondents reporting an increase in loyalty and a 2.2% uptick in sales. Overall, 21% said that Wi-Fi increases the amount of time customers stayed in the store, leading to more sales.

Wi-Fi in the Hands of Employees Boosts Loyalty and Sales

The benefit of having Wi-Fi in stores is even greater when sales associates have access to Wi-Fi on a mobile device. In the general merchandise segment, 53% reported an increase in customer loyalty and 4.3% increase in sales attributed to sales associate access to Wi-Fi.

Respondents shared that when associates have access to Wi-Fi, they have more information on hand to support the sales process. Also, Wi-Fi enables retailers to replicate their best sales people by providing their entire team with the right information at the right time.

Analytics for Wi-Fi Remains Untapped

Increased loyalty and sales aren’t the only benefits of deploying in-store Wi-Fi. Retailers also have access to valuable data. Even though the survey showed that retailers are struggling with the deeper data analysis of social media and sales conversions, they are getting value out of the technical analysis of low-hanging fruit.

Traffic counting is the most common analytic at 56%. Additionally, 49% of retailers track session duration, 49% track device used, 41% track hot spot used, 39% track repeat visits, 32% track time of use, 27% track sales conversion by Wi-Fi, and 17% track demographics.

The Financial Impact of Wi-Fi on Retailers

After taking into consideration the sales increases that retailers attribute to Wi-Fi, it is clear that Wi-Fi has a significant impact on a retailer’s bottom line. Overall, Wi-Fi contributes to a 5.4% average increase in sales, boosting revenue by 6.4%, and resulting in a 17.3% increase in earnings.

Similar to other areas of the study, general merchandise retailers experience the largest impact. For them, Wi-Fi contributes to a 6.5% average increase in sales, boosting revenue by 8.2%, and resulting in a 32.1% increase in earnings.

 

Survey Conclusions

Retailers are increasingly focused on dramatically upgrading store infrastructures to crate the store experienced of the future. These upgrades place a tremendous demand on bandwidth, increasing the need for a robust Wi-Fi infrastructure. However, the payoff is significant in terms of customer loyalty and increased sales.

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Mr. Fellah, is a Senior Analyst and founder of Maravedis with 20-year experience in the wireless industry. He authored various landmark reports on Wi-Fi, LTE, 4G and technology trends in various industries including retail, restaurant and hospitality. He is regularly asked to speak at leading wireless and marketing events and to contribute to various influential portals and magazines such as RCR Wireless, 4G 360, Rethink Wireless, The Mobile Network, Telecom Reseller to name a few. He is a Certified Wireless Network Administrator (CWNA) and Certified Wireless Technology Specialist (CWTS).