There's considerable excitement about the potential for retailers to offer in-store Wi-Fi in order to gain customer insight and deliver a personalised shopping experience.
Given the costs involved, a business case needs to be made ahead of any Wi-Fi deployment, and an expected ROI calculated. But what exactly is the ROI on in-store Wi-Fi, and how do you calculate it?
Hard data from the UK is thin on the ground, and the retailers who have deployed guest or staff Wi-Fi in-store are understandably guarded about whether doing so has led to an increase in sales, and an identifiable ROI.
Fortunately, a company in the US called the IHL Group have compiled a research document called the Impact of Store Networks and Wi-Fi on Customer Experience which includes some useful lessons for UK retailers in terms of calculating the anticipated ROI.
|Segment||Increase in Sales||Profitability before Wi-Fi||Profitability after Wi-Fi||Total Increase in Profitability|
Across the board, US retailers witnessed a 2% increase in sales. The impact is particularly pronounced in restaurants where sales increased by 2.7% simply by having Wi-Fi. On the cost of an average bill per table, this equates to an extra drink that would not have otherwise been purchased.
Giving staff access to Wi-Fi resulted in a 4.3% increase in the profitability of each sale in general merchandise shops, and 2.5% in restaurants. This is attributed to staff having greater product information, and being able to provide the right information at the right time with access to tablet computers.
Additionally, tablet computers can function at the point of sale and process purchases anywhere on the shop-floor, encouraging impulse buys which increase the profitability of each sale. This is particularly powerful as the additional purchases drop straight to the bottom line - no more rent is required and there are no additional labour costs to make this happen once the Wi-Fi is in place.
Looking at the increase in profitability and applying it to typical US retailer's revenue, you get some compelling results. The IHL Group research shows an $850m retailer would experience a $21.4m increase on their bottom line as a result of adding staff and customer Wi-Fi. Likewise, a $1.1bn restaurant chain would see $15.8m added to the bottom line, while a $8bn supermarket who saw 'only' a 5.8% increase would add $26.1m.
Given the tight margins in retail, anything that can feed straight through to the bottom line is worth considering - and the experience from the US indicates that Wi-Fi offers this. If you're looking at introducing Wi-Fi in-store, you might find our Wi-Fi is the Future if Retail whitepaper useful, which can be downloaded below.