Why marketers and retailers should warm up to heat maps

Written by Venkata Bhonagiri, Director, Business Planning

Despite the rise in eCommerce, brick and mortar stores continue to drive the majority of sales within CPG and other retail. (Source: U.S. Commerce Dept.) Nevertheless, the sheer volume of unused real estate in a store is very high and contributes to significant overhead costs, making many offline sales models unsustainable in the long term. With increased consumer confidence, discretionary income, and spending, retailers must find a way to make offline purchase effective and efficient for customers as well as for themselves. What opportunities exist to re-purpose the physical store setup and increase foot traffic? One of the most effective ways to address this question is through retailer heat maps.

In-store retailer heat maps are not new to retailers. They have been around for a few years now but continue to be under-used. Heat maps offer powerful pathways to address the shifting retail and CPG landscape. They potentially enable retailers to reengineer in-store space and bring in efficiencies. Heat maps show engagement levels within a store, pinpointing dead zones where customer movement is none to minimal.

Optimizing store layouts, maximizing resources, suggesting product placements based on in-store path learnings, grouping customer spending by location—these are some of the key benefits derived out of heat maps. By tracking customer movements in-store, retailers can identify the areas they gravitate towards the most. Once retailers understand which parts of the store are over and under trafficked, they can use that data to optimize their product placement decisions. As part of that, they can pull the most frequently sold items into less busy zones to increase foot traffic and exposure to areas that might otherwise be ignored. Heat map analytics can also recognize SKUs to improve the overall shopping experience and measure the true impact of a new product launch.

Because of that, heat maps are a win-win to both manufacturers and retailers. Manufacturers often compete against each other with in a sector for shelf space and in-store trade promotions. Retailers are frugal when it comes to offering in-store trade support such as a feature or a display unless there is an incentive e.g. evidence that improves their overall foot traffic and sales velocity for products within a category. And understanding in-store consumer behavior is one of the key challenges for most offline retailers, but this is precisely an area in which their corresponding click-and-mortar channels excel. Heat maps not only allow the manufacturers to identify hot spots for their product placements but also provide retailers an overview on general atmosphere and overall customer service. This improves consumers’ overall shopping experience. By leveraging heat maps, retailers can bridge the gap between online and in-store experiences and become just as responsive as any robust algorithm within an online ecosystem.

Several national stores have starting using heat maps, such as Sephora and Kohl’s, both of which then used the resulting data to guide new strategies. Sephora opened 13 new locations inside JCPenney around the country, offering co-branded gift cards to a handful of customers upon rollout. Kohl’s has adopted a similarly bold strategy to bring in new customers: adding Amazon return centers to stores in different locations. According to thedigitalecommerce360, in Chicago, stores with these return centers have seen foot traffic 8.5% higher than elsewhere, and since launch, 56% of customers who brought in Amazon returns have been new Kohl’s customers.

The next generation heat maps are here! Shopping experiences with Artificial Intelligence, connected retail stores, and indoor location services are the next big things. Keep an eye out on AI-driven wireless, as some retailers implement this technology. And some retailers are building stores of the future where the heat maps are leveraged in real-time, with immediate access to historic traffic patterns that provide valuable insights into ever-changing shopping behavior. These AI-driven heat maps could be used to increase share of wallet, boost conversion rates, and most importantly could help push relevant offers to customers visiting the stores.