I really don’t like shopping.  It used to bring out my inner Marxist, but now it just incurs a low-level buzz in my head.  I’ve found I can keep it under control if I satiate my internet addiction every 10 minutes or so.  Many stores, however, are large window-less Faraday cages, which kills the 3G signal on my phone.  There’s wifi, but it’s not free (it’s usually the corporate offices of the store, and the days of poor security with open enterprise networks are over).  Free wifi in a retail environment is still a rare treat.  Some stores get it, but the vast majority do not.

So, here’s my case for offering free wifi in a retail environment:

• The percentage of customers with smart phones will only get bigger.  The share of people who will want to check prices, ask-a-friend, or otherwise tweet about their shopping choices will only get bigger.  Do you want to welcome those people, or frustrate them?
• The potential for data mining about what customers are doing on their smart phones is a huge opportunity.
• Cost is pretty minimal.  One wifi antenna should do for most stores; Macy’s might need one on each floor.

Risks are fairly minimal, and can be contained with some common sense policies:

• Put a standard anti-porn filter to mitigate the legal liability of perverts in the store.
• It’s doubtful someone would go down to the mall to download mp3s– the bandwidth is relatively poor compared to the land-line available at the public library (not that I condone that kind of behaviour).
• Someone may try to hack into NORAD from the store wifi, but again– internet cafes are better for that because they offer coffee and a table for all your blue-tooth voice encryption equipment (again– I’m not suggesting anything).  Barnes & Noble isn’t a hip enough place to hang out for that long anyway.

So, where’s the upside?  Where’s the money?  It’s in that second point in the first group: the data mining.  There are several forms of valuable bits of data flying around that the store would be well to catch:

1. Competitor Recon: if Barnes & Noble could know exactly which books people are looking up on Amazon, they could match it against their own conversion rates on those same books.  They would know where they’re losing the sale.  They would also know which books people are viewing on Amazon that B&N doesn’t stock.  This is great informaiton for gauging demand.
2. Brand Awareness:  how often are REI customers going to REI.com whilst inside the store?  Are they trying to get details on products that the floor peeps aren’t explaining well enough?  Should the floor manager and corporation welcome this kind of look-up? [yes]
3. Social network awareness: how often do customers ping Facebook that they’re about to buy / just bought a 60″ LCD or a $600 pair of boots?  How often are they tweeting?
4. Instant couponing: most free wifis have a ‘Conditions of Use’ short login page.  This doesn’t need to have a username and password, just a paragraph that tells the customer we are tracking web traffic anonymously (for all these rich data mining opportunities).  it’s a great opportunity to offer someone some up-sell and cross-sell offers, and maybe an instant coupon with a barcode for 10% they can take up to the register.
5. These same advantages apply for airports: people love to surf– a gold mine of surfing behaviour lying unexploited because some airport middle manager thinks there’s more money in trying to charge $9.99 for the 2% of people on expense accounts that will fork over that money. [stupid]

Some stores will understand this sooner than others, but in a pretty short window (the next 18-24 months), we should have pretty ubiquitous wifi signals in any urban or suburban environment.  The benefits for free and onmipresent wifi are legion.  The most apparent opportunity is the VoIP, and the chance to show some advertisements.

Google gets this second point clearly– they’ve chosen a target-rich environment (airports), and are handing out free wifi just to get people to surf, and maybe use Google, and maybe click-thru on some AdWords.  In this sense, they’re competing with the idiot box CNN.  If it pays off, I wouldn’t be surprised to see Google putting in free wifi anywhere there are more than p number of people waiting for an average of t amount of time.  The equation would look something like:

Demand (D) = p * t * p(sp)

Opportunity (O) = D * p(G) – wificost

where

p = number of people in a given location

t = average time of wait or lounging around that location

p(sp) = percentage of people with smart phones

p(G) = percentage of people who will go to Google and click on an AdWords

wificost = cost of installing and running wifi base station

In the market, I would not go long on telco stocks, unless they’re leading the pack on opened smart phones.  I would go long on Skype and Cisco, and business intelligence providers, and of course, Google.