How Location-based NFTs Can Transform Retail Cross-Marketing & Boost Revenues for Shopping Centers
Cross-Marketing via Location-Based NFTs: Location-based Non-Fungible Tokens (NFTs) enable a novel cross-marketing strategy among mall retailers by verifying customer interactions across various stores. Through the issuance of NFTs tied to specific store visits and purchases, retailers can coordinate promotions, shared loyalty programs, or bundled offers, incentivizing cross-shopping within the mall and potentially overcoming the challenges faced by declining foot traffic and sales.
Enhanced Customer Experience: By gamifying the shopping experience through the collection of unique NFTs across stores, customers are not only incentivized to explore different retailers but also enjoy a novel, enriched shopping adventure. This system can also lead to the creation of digital mementos, adding a unique layer to the customer's shopping experience, while encouraging social sharing and community building around mall visits.
Data-Driven Insights and Revenue Optimization: The deployment of blockchain technology for issuing and tracking NFTs provides a platform for collecting valuable data on customer behavior and preferences. This data, including foot traffic patterns and purchase history, can aid retailers and mall operators in making informed decisions for future promotions, store layouts, and marketing strategies, which in turn, could boost revenues and enhance the overall vitality and sustainability of shopping centers.
The retail environment in malls and shopping centers is undergoing a significant transformation, challenged by the events of the 2020 pandemic and the ever-growing dominance of online shopping. Among the roughly 1,000 malls across the US, only a quarter are considered high performance, while almost half are facing store vacancy issues.
Amidst a 52% decline in foot traffic, several shopping centers face the risk of extinction if they cannot achieve an average sales target of $520 per square foot, not counting the sales contributions from high-volume tenants like Apple and Lululemon. Meanwhile, retail tenants, operating with tight profit margins of 2% to 6%, need a major strategic advantage or high sales volumes just to maintain their position in a mall.
The changing landscape requires mall operators to engage in more proactive property management, particularly as many brick-and-mortar retail categories face declining sales and reducing store sizes.
However, it’s not all bad news; the average mall shopper still visits 5 stores per trip, with 33% spending over two hours in the mall and visiting eight stores. This data points to a trend of longer, less frequent visits, which poses unique challenges and opportunities for retailers.
One solution is leveraging cross-marketing strategies to foster a collaborative retail environment, harnessing the collective strength of diverse tenants and capitalizing on customers' increased willingness to explore nearby shops.
By integrating web3 technologies, specifically NFTs tied to one's purchase activity at a specific store, mall operators can facilitate coordinated promotional events, shared loyalty programs, or bundled offers that incentivize cross-shopping across different stores within the mall.
Cross-marketing is a collaborative effort among different businesses to promote each other's products or services, fostering a symbiotic relationship that benefits all parties involved. It offers numerous advantages including cost savings, expanded customer bases, and enhanced customer engagement, all of which can positively impact store revenue.
Despite their promise, traditional cross-marketing avenues have their fair share of challenges:
Scheduling and aligning marketing events among different retailers can be challenging due to individual promotional timelines.
Ensuring a unified messaging across diverse brands requires a level of coordination that can be hard to achieve.
Efficient allocation of resources like staff time and marketing budget is crucial, yet challenging without centralized coordination.
Sharing customer data between retailers raises privacy and compliance issues, necessitating adherence to data protection laws.
Ensuring data accuracy and consistency is crucial but can be hindered by technological incompatibility between different retailers' data systems.
Inadequate Understanding of Mutual Benefits:
Lack of awareness of the overlap in foot traffic that certain retailers share may lead to dismissal of the potential mutual benefits of cross-marketing
Misaligned goals or target demographics among retailers can lead to a lack of enthusiasm towards cross-marketing.
These challenges primarily arise from a lack of coordination and aligned incentives among retailers who have traditionally operated independently or even competitively. The use of blockchain technology, a shared database in which retailers can transparently distribute digital rewards in the form of Non-Fungible Tokens (NFTs), can provide the essential tools to align stakeholders towards a common goal of mutually boosting sales and brand awareness.
In particular, location-based NFTs stand out as a novel innovation in the blockchain landscape, offering transparent and verifiable proof of customer interactions across various stores, thereby enhancing the trust and effectiveness in cross-marketing partnerships. Through these technologies, retailers can better coordinate and validate the outcomes of their collaborative marketing efforts.
Location-based NFTs are digital assets tied to specific geographical locations. They require a collector to physically travel to a specified location to mint the NFT. Unlike traditional NFTs that can be minted from their smart contract at any time, LBNFTs are minted only during certain events or under specific location-based criteria. The process may involve attending a conference, dining at a restaurant, or checking out at a shop.
This setup is ideal for enabling cross-marketing promotions, as it allows retailers to verify which stores their customers have shopped at and if they paid over a certain amount, using these data points as conditions to offer rewards such as discounts.
As described below, LBNFTs offer an innovative solution to facilitate cross-marketing among retailers sharing a common physical space like a mall or shopping center. Retailers can not only track and confirm the stores their customers have visited, but also whether they have spent a specified amount. Based on this information, they can then offer rewards like discounts to these customers:
Digital Proof of Physical Visit:
Issuance: Retailers issue LBNFTs to customers upon store visits and item purchases, serving as digital attestations of physical visits.
Uniqueness: The non-fungible nature of these tokens makes each one unique, adding a digital collectible flavor that may boost customer engagement.
Discounts and Rewards: Retailers can extend discounts or rewards to customers bearing LBNFTs from other stores within the same vicinity, thereby encouraging cross-store shopping.
Bundled Offers: Retailers can jointly create bundled offers; for instance, an LBNFT from a bookstore could unlock discounts at a neighboring café.
Enhanced Customer Experience:
Gamification: Making a game out of collecting LBNFTs from various stores could unlock special rewards or discounts, enriching the shopping adventure.
Digital Souvenirs: These NFTs can double as digital mementos of a customer’s visit, adding a novel layer to the shopping experience.
Data Collection and Analytics:
Customer Insights: Analyzing LBNFT distribution and redemption can yield valuable customer behavior and preference insights, aiding in crafting future promotions.
Data Protection: Personal details such as the amount a customer paid at a prior store could be stored off-chain. Instead, only confirmation of the customer having paid over a certain amount will be stored on the blockchain.
Traffic Analysis: LBNFT data could also unveil foot traffic patterns, enabling data-driven decisions by both retailers and mall management.
According to McKinsey, the use of advanced analytics on data such as foot traffic patterns can help mall operators optimize and store layouts and boost revenues by 20%.
Social Sharing: Promoting the sharing of LBNFTs on social platforms can cultivate a community spirit and broaden marketing reach.
Event Promotion: Hosting events with special edition LBNFTs as rewards could further drive engagement and cross-store traffic.
Blockchain: Leveraging blockchain technology guarantees the authenticity and ownership of each LBNFT.
Smart Contracts: Smart contracts automate the issuance and redemption of LBNFTs at checkout by integrating with store point-of-sale systems.
Digital Wallet & Mobile App: A dedicated app, coupled with a built-in digital wallet for storing NFTs, can streamline the distribution, collection, and redemption of LBNFTs at all partnered stores, rendering the system user-friendly and accessible.
The advent of Location-based Non-Fungible Tokens (NFTs) presents a novel solution to the problem of declining mall revenues and struggling retail tenants. By fostering a seamless cross-marketing ecosystem among the retail tenants, Location-based NFTs promise to optimize shopper interactions, thereby amplifying revenue streams and ensuring the sustained vitality of shopping centers.
This synergy between digital innovation and physical retail spaces not only propels cross-marketing endeavors but also augments customer engagement, laying the groundwork for a revitalized retail sector poised to offer enriched shopping experiences.