Retail Beacons Make Demands on Both Retailer and Shopper

Sep 30, 2016

Forecasts are bullish on the potential impact of beacons in the retail sector. But is enthusiasm for this technology grounded in reality?

Major retailers such as Macy’s and Hudson’s Bay have enthusiastically rolled out the technology to all of their stores, while other giants like Target and Kohl’s have launched substantial pilots.

These retailers join industry experts in pointing to a set of compelling drivers for committing to beacons, including the proliferation of smartphones, their ubiquitous presence as shoppers roam the retail aisles, and the consumer’s increased need for a more personalized shopping experience.

So:  Is the Year of the Beacon truly at hand?

We would argue that beacon technology has tremendous potential in the retail sector; however, we feel that the work involved – on both the retailer’s and the consumer’s parts – may be being understated.  This technology is uniquely designed to bridge the physical-digital gap on the store floor. But it is not an automatic slam dunk.  In fact, to ensure success, the strong potential of beacon solutions demands both a well thought-through strategy and the recognition that shoppers, retailers, and the industry at large are all at an early point on the beacon learning curve.  Professional patience is paramount.

First, what do we mean when we refer to beacon technology?  Beacons are small, battery-operated transmitters that communicate a weak Bluetooth signal (BLE – Bluetooth Low Energy) to other Bluetooth-enabled devices that are located within 30 meters or so distance. Individual device prices can range from $6 to approximately $30.  The beacon can be mounted on a wall or countertop.  With the shopper’s permission, the beacon can detect his or her nearby Bluetooth-enabled smartphone and send it relevant alerts, coupons, directions, product reviews, etc. 

The objective is to engage the shopper, provide a new level of in-store personalization and incentives, and keep the customer coming back for more.

In the consumer’s eyes, what is the immediate value-add? 

  • Timely, targeted information can result in a more knowledgeable purchase.
  • In-store navigation assistance can make the shopping experience quicker and easier.
  • Coupons and discounts for high-interest items can translate into real savings. 
  • Award points and even a personal welcome when entering the establishment can make customers feel valued.

What are the benefits to the retailer?

  • More in-store traffic, as a result of improving, mobilizing, and personalizing the shopping experience.
  • Increased sales, as a result of making product information more accessible and making the actual purchase experience quicker and easier.
  • A clearer understanding of shopper behavior, based on data collected and analyzed over time.
  • Stronger customer loyalty and higher retention rates by understanding and providing what the shopper wants – and does not want -- from beacon solutions.
  • An additional revenue stream by selling advertising “space” to selected merchandise brands.

Clearly, the potential benefits of retail beacons demand that merchants take the technology seriously.  However, in order to be effective, a beacon-based store strategy also demands some work on both the part of the retailer and the shopper.

Retailers will need to:

  • Research potential beacon manufacturers and service providers.
  • Decide if the solution will be created entirely in-house or with an external partner.
  • Formulate a realistic budget and rollout plan.
  • Research and understand shopper preferences around proximity-based solutions. What potential benefits will make them agree to be tracked on-site?
  • Create/adjust the retailer’s mobile software application to accommodate a beacon-based strategy.
  • Put an asset tracking policy and process in place to keep track of the hardware.
  • Train the workforce.  The solution must be quick and easy to understand and implement.
  • Monitor and update on an ongoing basis.

To leverage the power of in-store beacons, shoppers will typically have to:

  • Download the store’s app.
  • Open app each time they enter on site.
  • Turn on their smartphone’s Bluetooth signal.
  • Accept location services on the app.
  • Opt in to receive in-store notifications.

While consumers are becoming increasingly familiar with their smartphones’ messaging and interactive features, a beacon strategy does demand that the shopper take multiple overt steps to participate each time they enter a participating establishment. This is viewed as a potentially massive adoption barrier, reinforcing just how important it is for the retailer to clearly communicate the availability of this premier level of service and the personalized value-add it holds for the shopper.

In fact, in addition to the nuts and bolts of actual implementation, a retail beacon strategy should include:

  • A marketing plan that reminds shoppers of the availability of beacon-based assistance and rewards.  Make it front-of-mind.
  • A data analytics capability that leverages the impressive amount of customer behavior information that can be uncovered by beacons.
  • An ongoing, high-level sensitivity to the evolving shopper experience.
  • A deployment blueprint that includes a controlled pilot and a carefully planned rollout.
  • A commitment to examine the monetization potential with interested brands down the road.

Simply put, beacons offer significant hard- and soft-dollar benefits within physical retail establishments. The key will be careful planning and deployment, effective marketing support, and engaged, professional management on a day-to-day basis.

An initial version of this post resides on the Samsung blog site.

 


Jeanine Sterling

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