Business Costs & Regulation

Retailers Bank on In-Store Wi-Fi

Go ahead and check out our competition, they say, betting that you won’t bother schlepping to another store after all.

Retailers are making comparison shopping easier for consumers. Really.

By year-end, about 25% of big-box and other anchor retailers, such as department stores, will be offering free in-store Wi-Fi access to shoppers, giving them more opportunities to obtain product information and compare prices using laptops and tablet computers in addition to smart phones. Other, smaller retailers are sure to follow.

That’s an about-face from the former conventional industry wisdom that viewed comparison shopping as leading to lost sales more often than not. But more and more merchants realize that many customers who compare prices or products on a smart phone or laptop stay and buy where they are, saving themselves the hassle of going elsewhere. Meanwhile, a customer who has to leave a store to compare prices may never return.

Retailers saw what free Wi-Fi did for Starbucks and McDonald’s -- it enticed customers to linger longer and spend more. They hope that it will do the same for them. Plus, the broader Wi-Fi availability will take some of the heat off the ever-more-crowded cell phone networks and allow more shoppers easier and often quicker access to information.

The number of public Wi-Fi locations in the U.S. -- that is, not in homes or offices -- increased by 23% in the third quarter of 2010, according to the mobile ad network JiWire, which provides the broadest listing of Wi-Fi locations. About 54% of those locations offer the service free.

Expanded Wi-Fi networks can benefit specialized retailers as much as the big boys. For example, a network can act as a virtual expansion of a small specialty store, says Kasey Lobaugh, a principal with Deloitte Consulting.

“The [merchandise] assortments they keep on hand are relatively constrained from a square footage standpoint,” Lobaugh says. But on-the-spot access to an e-commerce site can offer consumers a wider range of products and ensure that their purchase comes from that retail outfit. Plus, retailers can push discounts or other store-specific offers at shoppers who access the Wi-Fi network through a store’s individual portal, or home page.

Installing an in-store Wi-Fi network can be as easy as hooking up a modem and a router. But stores of all sizes must make sure that their back-end Internet connections, or their “enterprise networks” -- the ones that they use to house transaction data, inventory information and the like -- are secure and kept separate from their open network for consumers.

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