Retailers need to acknowledge and understand the opportunities and threats posed by handset-based indoor location technologies or run the risk of losing control of the mobile experience in their stores, finds ABI Research. Though indoor location deployments in retail are largely focused on infrastructure-based technologies to date, market potential is accelerating as major companies like Apple, Baidu, and Google aim to release their own handset-based indoor location technologies to developers within the next year.

“Retailers largely failed to exploit the possibilities of mobile thus far and are now in danger of repeating the mistakes they made with eCommerce,” says Patrick Connolly, Principal Analyst at ABI Research. “The days of loyalty cards and paper coupons are ending and retailers do not seem ready. They need to take control of the digitization of their stores and learn to put technologies like indoor location to work.”

Handset-based indoor location technologies allow retailers to measure marketing campaign performance, streamline in-store processes, create new advertising revenue streams, and most importantly, use mobile to improve the overall shopping experience by removing frictions and creating “shock and awe” moments.

The technology creates opportunity for retailers to scale their stores across a chain and engage with far more customers. Initiatives like Google Nearby remove the need for in-store apps. However, as the same tools become available to all developers, ABI Research predicts the market will rapidly embrace indoor location technologies and services, which third parties will then be able to deploy in any retail store.

“Imagine a third-party shopping app that can offer a highly accurate, detailed map of a shopping outlet tailor store offers and advertisements directly to the individual consumer,” concludes Connolly. “This would all happen without the app owner needing to deploy any additional infrastructure or obtaining permission from the retailer. This is something that could become a reality very soon, which is why retailers need to educate themselves on this up-and-coming market.”

These findings are from ABI Research’s A Retailer’s Guide to Indoor Location Technology and Handset-Based Indoor Location for Retailers. This report is part of the company’s Beacons, Indoor Analytics & Location, Enterprise IT & OT Convergence, Transformative Technology, and Semiconductors sectors, which include research, data, and analyst insights.