Location-based services are hardly the latest invention to leverage online and computing processes, but these days they just may be regarded as the fortune tellers of the Internet, offering valuable predictive information for retailers.
Through aggregation of data, the location-based services market began its commercial development path some 20 years ago as the underlying technology in applications that ranged from tracking physical goods to finding people during emergencies via their mobile devices.
Location-based services today are almost synonymous with the analysis of consumer foot traffic, with the ability to offer key insights in a number of business areas for retailers. Foursquare has been leveraging location intelligence since 2009 in its mission to drive consumer experiences and business systems through a crowdsourcing database of 85 million places.
Foursquare counts 50 million monthly users of its websites and two apps, Foursquare and Swarm. The Foursquare app is one that the company describes as delivering the opportunity of “discovery” that allows people to connect to places of interests such as restaurants, retail shops and nightlife. Its Swarm app, based on mobile platforms, is for consumers to “check in” to share their locations on social networks.
In addition, Foursquare leverages the data it holds to offer a number of business systems such as Attribution, which measures conversion of digital media spend into foot traffic to retail locations. Its Place Insights service lets retail executives and marketers see how local foot traffic trends may affect their businesses, such as when seeking new locations or assessing shifts in changing consumer foot traffic; Pinpoint helps retailers target advertising within the Foursquare app environment and leverage insight into consumer shopping activity.
“Foot traffic information and trends can help retailers really understand their business and their competitors’ businesses,” says Michael Harkey, Foursquare vice president of business development. “What a retailer can do is use it to better understand their market and better understand their competitors and make decisions in close to real time.”
Based on foot traffic patterns, Foursquare correctly predicted that Apple would sell 13 million new iPhones.
Reporting real trends
Counting pure foot traffic is one thing, but recently the New York-headquartered company has been relishing in its role as super prognosticator. As noted in media reports, Foursquare used foot traffic-analysis to foretell financial results for Apple and Chipotle.
Last September, Foursquare examined foot traffic at Apple retail stores in advance of the launch of the new iPhone 6s; based on the traffic patterns it saw, the firm predicted that consumers would buy 13 million to 15 million iPhones over the first sales weekend. Apple sold some 13 million of the new phones.
This April, Foursquare focused on Chipotle, which had seen its business suffer following highly publicized cases of E. coli linked to some of its restaurants in 14 states. Foursquare CEO Jeff Glueck predicted in a blog post that Chipotle’s first-quarter sales figures would fall by some 30 percent.
Glueck based his prediction on foot traffic information from Foursquare and Swarm app users: Two weeks later, Chipotle released sales numbers showing a 30 percent loss amounting to $26.4 million in its first-ever quarterly loss since becoming a public company in 2006. Glueck concluded that once-reliable Chipotle users began to stay away from stores amid the health crisis, resulting in less foot traffic.
Harkey says the company’s pitch for the veracity of Foursquare data is highlighted by the Apple and Chipotle cases.
“We have the largest foot traffic panel in the world,” he says. “There are over 1 million people who have opted into our panel. It is derived from the 50 million users, and it represents a census. We see the panel moving in and out of commercial venues in real time.
“Because of the scale and because of the precision of seeing this foot traffic, we are able to report back to retailers real trends that they couldn’t otherwise get through their own stores,” Harkey says.
‘Poised for growth’
In an April 2016 market guidance report, digital marketing, media and commerce research firm eMarketer concluded that the location-based services market is poised for growth. eMarketer noted in its report that nine of 10 U.S. smartphone owners use location-based services, and that the number of smartphone users will increase by nearly 9 percent in 2016, with those using the services increasing at a similar pace.
The location services market in the mobile sphere has been challenged, eMarketer said in its report, to convince users to share their locations, along with an overall low quality of some mobile location data. But the location-based services industry is working to raise awareness of mobile data quality as it races to meet expected increases in location-targeted advertising.