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When you shop online, retailers are watching. It’s called traffic-flow analysis. But in brick and mortar stores, it’s a different story. Now, retailers are hoping that the electronic device most of us carry at all times, a mobile phone, will soon change that.

When you shop online, retailers are watching. It's called traffic-flow analysis: Amazon knows what you looked at first, what you looked at next and what element on the page led you from point A to point B. When you decide that you don't really need a second colour in that $60 yoga tank top, Lululemon can see the exact point in your visit that you abandoned that item in your cart.

This kind of intelligence allows for smarter e-commerce sites, designed to make the path from home page to purchase-confirmation screen as smooth as possible for visitors.

But in brick and mortar stores, it's a different story. Now, retailers are hoping that the electronic device most of us carry at all times, a mobile phone, will soon change that.

"You're really quite blind in a retail environment," said Sumit Oberai, chief information officer and executive vice-president of digital at Indigo Books & Music Inc.

Indigo has traffic counters on the number of shoppers who visit a store and how many buy something, but it does not know how many people visited a certain section, or looked at a specific advertisement or display in-store, versus the number who were persuaded to pick up that item.

It's just one thing that the retailer is hoping to understand better in the future as it beefs up its mobile effort. "It's a bit of a mecca for marketers to have more advanced analytics about what's happening in the store," Mr. Oberai said.

Indigo focused much of its efforts in smartphone technology on the applications for its e-reading start-up, Kobo. After Kobo was sold to Rakuten Inc. in 2011, the retailer turned its attention to its mobile strategy. It is launching its first mobile app this fall to cater to core shoppers – especially the roughly six million members of its "plum rewards" loyalty program.

Indigo's customer research showed that some of the most-desired changes to the store could be addressed with mobile technology, including not having to carry their loyalty cards in their wallets but also better checkout times, which are slowed down by cashiers looking up loyalty accounts for members who left those cards at home. The same goes for gift cards and coupons. The company's research also suggested they want the wish lists and gift lists they create online to be more easily accessed in-store.

"We think a mobile app should be a utility, first and foremost," Mr. Oberai said.

That view is reflected in a Léger Marketing study commissioned by digital anaytics company SAS Canada that is being released on Friday. The study found that consumers crave a more useful, as well as personalized, experience from their mobile phones – and serving up ads is not the best way to speak to them.

The study found that, unsurprisingly, even the most plugged-in consumers do not tend to click on digital ads. Of the smartphone owners surveyed, two-thirds said they "rarely" or "never" click on online advertisements, with the minority reporting that they do so regularly. It helps when an ad is personalized. In that case, 49 per cent said they would regularly click on ads. But even then, just over half still said they would rarely or never consider it. The greatest opportunity for marketers is arguably not in advertising to those digitally connected consumers; it is in offering them something they will find useful.

Starbucks Corp. has had early successes in the mobile space with its apps, speeding up the coffee line and getting to know its customers' preferences on a grand scale. At the Sanford C. Bernstein Strategic Decisions Conference last month, chief executive officer Howard Schultz reported that Starbucks is processing roughly 4.5 million mobile payments each week in the United States. (Mobile usage rates are comparable in other markets, including Canada, he noted.) In total, the company's mobile apps have more than 10 million active customers.

"We are witnessing a seismic change in consumer behaviour due to the emergence of social and digital platforms and the significance and ubiquity of mobile as a consumer platform," Mr. Schultz told analysts on a conference call in April to discuss the company's earnings. The data Starbucks can now collect on those users are crucial for it as a marketer.

"Retail has historically been a rather anonymous transaction for many," said Lori Bieda, executive lead for consumer intelligence at SAS Canada. "… Mobile makes a consumer known to retailers."

That's particularly powerful when it can be linked with the analytics that companies are already assessing through loyalty programs that track purchase history, preferences and uptake on offers. One of the bonuses Loblaw Cos. Ltd. will receive from its deal announced this week to buy Shoppers Drug Mart Corp., Loblaw executives said, is the 10-million strong Optimum loyalty program and all the consumer data it holds. Loblaw also highlighted the fact that Optimum was ahead on working with mobile devices.

The SAS research showed that people want their phones to act as "personal shoppers." Those surveyed said they would be more likely to return to a store that sent them offers on their mobile devices – but that's highly contingent on those offers being relevant and targeted to that person's preferences.

"In the background, there is a marketer calculating that and delivering that customized offer," Ms. Bieda said of the ideal scenario. "… When [data and mobile] work together in a marketing ecosystem, the power of that allows you to develop those personalized messages. When they work well, the customer does not feel bombarded, they just think that the company is smart."

For Indigo, that kind of personalized marketing is what a mobile strategy will allow for in the future. Mr. Oberai would like to have the ability, with consumer permission, to deliver notifications and offers on mobile phones that are personalized to each user's location and preferences.

"We'll have some personalization out of the gate, but I think much richer personalization will happen in the industry," he said. "There's a bunch of things we'd like to think about in the future."



47 per cent said they would be more likely to visit a store again if offered personalized promotions on their smartphone.

67 per cent said they have used their mobile phone to buy something.

71 per cent said they would buy something if they received a discount or other promotion on their smartphones for a complementary product while they shopped.

69 per cent said they find it helpful when retailers make suggestions to them based on their personal online shopping history.

Source: Léger Marketing study of 1,506 Canadians who own smartphones, commissioned by SAS Canada