Mobile accounted for 25% of Ulta's e-commerce revenue during Q2.
More than a fun service for coffeehouse web surfers, wireless fidelity is making it easier for retail chains to communicate with headquarters.
When John Wooley told his corporate financial managers that he wanted to invest in a new broadband wireless technology for Internet access, then give it away for free to customers who visited his stores, he ran into a few skeptics. “They wanted to know return on investment, but I said I thought it could attract new customers,” he says.
Wooley is president and CEO of Schlotzsky’s Inc., an Austin, Texas-based chain of some 650 sandwich shops with a bent for the uncommon, from its unusual name to its unique assortment of food and, now, free broadband wireless fidelity, better known as wi-fi, for everyone in or near a Schlotzsky’s Deli. After several months of testing wi-fi networks in 10 restaurants, Wooley surveyed his customers and the results underscored his initial hunch: A significant number were coming in just for the wi-fi, which enables them to quickly download Internet content, including streaming media, music recordings and other data-intensive files to their personal laptops or PDAs or to one of Schlotzsky’s iMac computers.
“We’re seeing a really positive response from customers of all ages,” Wooley says. And his hunch about new customers was right: 6% of customers said the main reason they were in a Schlotzsky’s was for the wi-fi Internet availability. “The revenue those customers bring in is 20 to 25 times what we spent to install wi-fi,” he says. “I’m feeling pretty good about that.”
Tapping into frustration
Schlotzsky’s isn’t alone in installing wi-fi as a way to lure customers. Retailers will account for nearly half of the expected growth in computer chipsets that enable computer and network devices to send and receive wi-fi signals, according to a study by Allied Business Intelligence Inc. (see related story, page 33). Meanwhile, local wi-fi networks are being established throughout the U.S. and other areas of the world by T-Mobile USA Inc., a unit of Germany’s Deutsche Telekom AG, and by Cometa Networks Inc., a joint venture recently formed by AT&T, IBM Corp. and Intel Corp.
As more people experience the web and expect good browsing performance, high-bandwidth access to the Internet is becoming more in demand. And by supplementing the general rollout of broadband to homes by offering wi-fi access, retailers can put themselves in the vanguard of a hot trend that makes high-bandwidth web access available to virtually anyone. “It has tapped into a general frustration over broadband, which was supposed to be in everyone’s homes by now,” Wooley says.
Schlotzsky’s is even going beyond the customer service route by making wi-fi available to anyone in homes, libraries or nearly anyplace close to a Schlotzsky’s Deli, where wi-fi antennas are being mounted on the roof as well as inside so as to reach the maximum number of users, whether they like Schlotzsky’s sandwiches or not. Partly because of the pilot program’s proximity to the University of Texas and a technologically advanced population, the community response was swift, even before Schlotzsky’s publicized it. “People locally figured it out,” a spokeswoman says. “And then newspapers started calling. We didn’t even advertise.”
Applications of wi-fi are just beginning to roll out among retailers in addition to the pilot program at Schlotzsky’s. Federated Department Stores Inc. is providing wi-fi Internet access for free in juniors’ apparel departments in many stores, including Macy’s and Bloomingdale’s, as part of efforts to attract younger customers. Circle K convenience stores, Borders Book and Music stores and Starbucks coffeehouses are using their wi-fi installations to provide Internet access for a fee. Starbucks managers and employees will also use wi-fi to communicate with corporate headquarters. And Unicru Inc. is installing wi-fi-based job-application kiosks in retail stores. Indeed, wi-fi’s long-term use may become increasingly important as a non-consumer application: providing store managers and employees with portable high-bandwidth Internet access to corporate headquarters, for such tasks as filing sales reports or receiving corporate training through e-learning courses (see related story, page 32).
Unlimited access, high speeds
Wi-fi applications also present retailers with opportunities to generate advertising revenue by selling ad space on the entry portals to their wi-fi networks, suggests a spokesman for NetNearU Corp. NetNearU recently released its NNU Runtime Engine for Wi-Fi, which is designed to configure computer terminal kiosks with wi-fi access and to coordinate with NetNearU’s Adtrackos application for uploading and tracking online ads. NetNearU lists Federated among its customers, though a Federated spokesman says it is too soon to say how the retailer would develop further use of its wi-fi network or if that would include the placement of ads.
Wi-fi, based on a wireless specification defined by the Institute of Electrical and Electronics Engineers Inc., extends high-bandwidth Internet access from a fixed line to wireless. A device connected to the line conducts the wireless signals that properly equipped computers emit to the broadband land line. Anyone within the range of a wi-fi network, or hot spot, can log onto it from any desktop computer, laptop or handheld device configured for wireless web access. Many new computers come pre-configured for wireless Internet access, requiring only the purchase of a PC card which is easily inserted into a computing device and is usually available at consumer electronics stores for under $100.
Compared to the more conventional means of accessing the web from public places like retail stores and restaurants-where web access, if it’s available at all, is usually hampered by slow downloads and a limited number of wired ports-wi-fi enables virtually unlimited points of access at high download speeds. And because it’s wireless, retailers don’t have to extend high-bandwidth phone lines to each computer jack. Not only does that save enormously on installation costs, but it also leaves retailers with the flexibility to alter store layouts and merchandising displays without having to worry about a complex installed network of high-bandwidth wires.