As many as 10,000 stores – mostly in the United States – will have indoor location technology deployments in place by the end of this year, according to a new report from ABI Research.

The research firm’s latest edition of its Location Technologies forecast suggests that the era of in-store advertising and coupons delivered via a mobile phone is quickly becoming a reality in the U.S. Additionally, the report says growth is being driven by startups such as shopkick and not Google, as some might expect.

“A year ago, people thought Google would eat up this market,” said Patrick Connolly, a London-based senior analyst at ABI Research. “In actual fact, retailers have been reluctant to work with Google, which is creating a huge opportunity for startups.

“Because retailers are going to be tying in loyalty and other data, they are very reluctant to put that power in Google’s hands and want to partner with startups or deploy a solution themselves to retain power,” he said

With the potential offered by in-store location services to gather important data about shoppers – data that can be used to serve ads – retailers are reluctant to hand over control to Google, which could use the data to serve ads for competitors.

Embracing location technology
Retailers are gravitating toward location technologies such as in-store apps and mapping as they look to leverage mobile to drive bricks-and-mortar sales.

ABI forecasts that total indoor location technology installations will approach 10,000 stores by the end of 2012. Most of these installations will be located in stores in the U.S., which retailers have been more proactive in adopting location technology than elsewhere.

“The numbers are worldwide, but the activity is all U.S. based at the moment,” Mr. Connolly said. “About 95 percent of this is happening in the U.S.

“This is because retailers in the U.S. are open to the technology and the benefits it will bring,” he said. “Also, there are far more companies and startups offering solutions in this area.”

The research company also forecasts that the total number of mapped buildings will reach 70,000 by the end of 2012 and 500,000 by 2015.

Startups dominate
In-store location services are currently dominated by shopkick, which uses audio technology. However, ABI forecasts that WiFi technologies will become dominant by 2015 as companies such as Cisco and Motorola build out their indoor location offering make it easier and cheaper for retailers to adopt.

By 2015, ABI expects WiFi to be followed by Bluetooth as the second most prevalent in-store location technology.

In addition to retail stores, location technology deployments are happening in stadiums, museums, airports and universities.

The companies offering these services are expanding to support customer analytics in addition to navigation and wayfinding. ABI expects them to ultimately add hyperlocal advertising and couponing as well.

Driving sales
In-store location technologies offer two key benefits to retailers .

First, the technology enables retailers to gain some of the same analytical benefits of online shopping by monitoring how shoppers move through a store. As a result, retailers should be able to gain a deeper understanding of how to sell advertising, how to arrange the store and generally, deliver a better, more efficient in-store experience.

Additionally, location technology will enable retailers to serve ads and coupons to users that are relevant to them.

“There is this huge potential to drive additional sales,” Mr. Connolly said. “Three billion coupons were redeemed in the U.S. in 2011 and local advertising was a $50 to $60 billion business – indoor location technology makes the whole thing far more efficient and user friendly.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York