Indoor Location Has Major Growing Pains, but Big Upside

August 27, 2014  - By
Image: GPS World

A number of factors are holding the proximity marketing/indoor positioning markets back: standardization issues, consumer acceptance/privacy, retailer awareness and the technology itself. However, as one location executive put it, it may be the one way that retailers with brick and mortar stores can compete with Amazon and other online giants. 

Indoor location and proximity marketing may be the way large and small brick and mortar stores can compete with online retailers in the future, said panelists at the New York Place conference, held July 22. But all of this indoor location market talk doesn’t mean much if consumers don’t find a need for it.

“I am in an aisle at a grocery store and you sent me a coupon for cat food, and I don’t have a cat, I am not going to be interested. The retailer gets to own the data by providing a great experience to the consumer, not the spontaneous ‘you are in a store — here’s some information,’” said John Dempsey, Datalogix head of mobile and video.

While having a broad picture of a consumer’s “mobile moment” is important, there is something to be said about bombarding a consumer with too many location-based applications, said Doug Kilponen, Wanderful Media chief operating officer. “There are a limited number of apps consumers are willing to have, but not 200 different ones. It’s one thing to have an app for say, Target, but trying to find out what is broadly available during shopping makes shopping too much work,” he said. “Trying to find out what’s available becomes too much work as there are too many options [for the consumer].”

From a retailer’s perspective, they want consumer’s data, and will share it with partners, but they also want control, said Catherine Lindner, Shelfbucks chief marketing and merchant officer, who was an executive at Walgreens.  “If you think about your own shopping behavior, there is only a few places you actually go to and spend money — a grocer, drug store.  That retailer wants your data, and it makes sense,” she said.  “How do we spend the money to grow the business?  The idea that there is one bucket of money to transfer is not going to happen.”

One company says that consumers don’t want to be “advertazed” by retailers. “Their job is to show you Calvin Klein, but sometimes there is not enough information or context.  They hijack moments, rather than create them,” said Scott Townsend, Urban Airstrip director of agency programs.

Still, retailers are increasingly using indoor location as part of their mobile strategies. Jewelry chain Alex and Ani has three beacons in their Boston and New York stores, said Ryan Bonifacino, Alex and Ani vice president, digital strategy. “We really want to prove that this [indoor location] can really work.  We really want to get in front of people who wouldn’t have discovered us,” he said.

Indoor Location Standardization? What Standardization?

Like any new technology and market, industry standardization will have growing pains, and a lot of the problem may be with the retailers, said panel members. “There are issues with standardization. If Walmart puts a [indoor positioning] in to its store — they don’t care if it works anywhere else,” said Don Dodge, Google developer advocate.

Indoor location is the classic chicken-before-the-egg situation, said Chris Goodall, Trusted Positioning founder and CEO. “There currently are no standards for indoor [positioning], maybe we need it.  Databases are not standardized,” he said.

A lot of the reason that standardization has not be resolved is that no big application, the old killer app, has appeared. “Indoor is something that has not emerged yet, it’s a long tail story,” said Dan Ryan, ByteLight co-founder and CEO.  “Every location company is trying to build a network — and naturally attract developers.”

Making Proximity and Indoor Location Relevant to Retailers 

Some retail chains like Walgreens have used indoor positioning technology for years and are considered some of the major early adopters. However, making consumer-purchasing behavior data relevant to retailers is the only way for indoor marketing to take off.

The concept of geofencing each store has been tested in several locations. One company envisions an image of a celebrity greeting consumers in a store with an offer. “Walgreens focused on not invading people’s privacy. But they basically asked users, what’s important to them when they walk into a store,” said aisle411 founder and CEO Nathan Pettyjohn. “[Bluetooth Low Energy] beacons can do this very elegantly.  When a consumer walks through a store, perhaps they see a celebrity popping out to greet them.”

In many successful mobile marketing campaigns, all have a common theme — proximity components always enhance sales, said James Smith, Verve chief revenue officer.  “Every one of our studies says it drives sales. Sometimes we hear that geofences don’t work — my answer to that is they are in the wrong places,” he said. “A person can go into a place 15 days later and a beacon locks on them — the retailer is happy because it works. Consumers are more empowered because they have a research device in their hand to go where they want to go.”

Case Study: Walkbase

A Finland-based company is delivering market research to retailers that examines consumers’ in-store shopping behavior and loyalty patterns. Walkbase, which signed a deal with Helsinki airport operator Finavia, started in 2007 when it spun off from an indoor location company.

“It’s a retail tool that analyzes indoor performance of marketing campaigns and [sales] conversion. It measures when consumers come into a store — do they bounce out or are they engaged?” said Juha Mattsson, Walkbase vice president, sales and marketing.  “A retailer can launch a campaign that is affected by a consumer’s indoor journey. Whether that is through coupons, or not, as some retailers don’t want that.”

Mattsson says that the company is operating primarily in Europe — and is waiting for what indoor technologies will win. “It is just a matter of time before the market takes off. Retailers are very interested in these types of consumer spending analytics,” he said. “We will be launching a U.S. white paper on in-store optimization as it’s all about education. We also are rolling out a version 2.0 of our product in the third quarter.”

In other LBS news:

  • According to published reports, Michael Halbherr, CEO of Nokia’s HERE mapping unit, will be stepping down. Halbherr, who is based in Berlin, steps down after eight years at the company.  As recently as 2012, HERE, then called Navteq, had been losing money but had stabilized recently. Cliff Fox, HERE senior vice president, will be acting CEO until a replacement is found.
  • I will be covering CTIA’s Super Mobility Week in Las Vegas, Sept. 8-11.  To arrange an interview with me for Wireless LBS Insider, or to submit press releases, contact me at


About the Author: Kevin Dennehy

Kevin Dennehy is GPS World’s editor for location-based services, writing a monthly column for the LBS Insider newsletter. Dennehy has been writing about the location industry for more than 20 years. He covered GPS and location technology for Global Positioning & Navigation News for seven years. His articles on the wireless industry have been published in both consumer and trade magazines and newspapers.