‘Beacon’ of hope for the Retail Sector
Did you know that the rise of smartphone shoppers boosted online retail spending to a record number of £133bn in the UK last year? Also, nearly 56% users of smartphones want to receive location-based offers on their devices once they are near a store.
Mobile phones have completely revolutionized the way we shop. Yes, we know it’s an obvious today. The digital world has completely reshaped and redefined the retail industry, with online sales hitting the roof.
The raging popularity of e-commerce platforms, especially Amazon, hasn’t gone down well with the brick-and-mortar retailers. They are literally feeling the heat.
Big players such as JC Penny announced that it will close down nearly 140 stores and two distribution centers in the coming months. This isn’t good news for the retail sector.
So, does this mean that brick-and-mortar retail stores will finally cease to exist? What should retailers do to entice the audience so that they feel compelled to step into their stores?
There’s a popular saying that every cloud has a silver lining.
Many of the brick-and-mortar stores today have made a smart move by adopting beacon technology to win back customers. This technology has also helped them gain their lost ground to a certain extent.
Since most of the urban shoppers today are hooked onto smart devices to browse and research online for anything and everything, retailers are increasingly adopting this latest technology to tap the potential customers, win loyalty and drive sales.
Fact is: retail is the most popular sector where beacon technology is being used now.
What is beacon technology?
In simple words, beacons are small devices (approximately 3cm x 5cm x 2cm), which use Bluetooth Low Energy (BLE) to transmit signals to smartphones within a short range. Bluetooth LE is a proximity technology and the main purpose of beacons is “proximity marketing”.
All you need to do is install this device or devices anywhere inside a retail store. It sends out signals to the app users whenever there are in the vicinity of the store.
Beacons communicate with smartphone apps over Bluetooth, thus authorizing the retailers to send alerts to the devices of the customers.
This way the brands can gather information on the shoppers’ movement inside the stores. Also, it enhances the shopping experience and makes shopping easier and quicker for the customers once they are inside a store.
Types of beacon protocols
Though the technology, “Bluetooth” was initiated by Nils Rydbeck, CTO at Ericsson Mobile in Sweden, and by Johan Ullman in 1989, it was in the year 2013, when Apple introduced iBeacon that the world stood up and took notice of beacon technology.
- In mid- 2013, Apple introduced iBeacon, the first beacon protocol in the market.
- In July 2015, Google announced Eddystone. Google’s beacon platform can transmit URLs to mobile devices, which can then be opened in a mobile browser.
Beacons vs iBeacon
Beacons are the hardware devices that send out and receive BLE signals. iBeacon, on the other hand, is a technology built into Apple devices which allows iPads and iPhones to scan for Bluetooth devices within a range.
List of 10 beacon hardware manufacturers in the world:
Now, according to a report in BI Intelligence, these minute devices are the rapidly-growing in-store technology since mobile credit card readers. So, why are the retail giants taking resort to beacons, also called proximity beacons, to smarten up a store?
Here are the top 4 reasons why beacons are winning the hearts of the brick-and-mortar retailers:
- More customer engagement by offering contextual information, targeted messages and notifications
- Building customer loyalty by sending personalized discounts and coupons in real-time
- Providing insights on customer purchase behaviour to enhance the shopping experience
- Providing contactless payment
Beacons increase customer engagement
Imagine, you are outside a shopping mall and the phone starts buzzing. You receive a notification reminding you to buy some clothing items.
Beacons can encourage you (read a shopper) to come inside the store and complete the shopping. Now, once you enter the store, you start receiving messages explaining how to select the clothes.
Retailers are leveraging the power of beacons to engage customers in the following ways:
- By sending welcome messages, promotional deals, reward points and pop-up alerts to a customer’s smartphone based on their shopping activities.
- By assigning sales assistant to a customer who spends considerable time near a particular product/section
- By pushing real-time offers to customers inside the store. It enriches the shopping experience and also helps in customer acquisition and retention.
- By flashing the descriptions of a product on the smartphone’s screen once a customer approaches a particular product inside the store.
Did you know the Swan Centre in the UK became the first shopping mall to use beacons, which allowed them to organise in-store campaigns for its visitors?
Using beacons to strengthen customer loyalty
In today’s cut-throat competition, customers have countless options and can easily switch from one retail brand to another if they are not satisfied with the product or the service.
Here the customer loyalty programs come into play. They are highly crucial for retailers to strengthen their relationship with the customers and also accelerate sales.
According to a survey, 76% of customers believe that loyalty program strengthens their relationship with brands.
Here’s how retailers can win the trust of the shopper and also convert visitors into buyers through beacon technology:
- The moment a loyal customer walks into a store, beacons allow retailers to send style tips and personalized content based on the location and purchase history.
- Retailers can use beacons to thank the customer for a purchase and also reward shoppers who have been loyal to the store.
Did you know over 40% of shoppers look for offers on their smartphones while they are inside a store?
Collecting customer data through beacons
If a retail chain wants to present a supreme shopping experience to its customers, it should be aware of its customers’ buying patterns. All big retail chains across the world are using this technology to build customer relationship through valuable insights.
Here’s how beacons can help retailers in understanding customer behaviour:
- Beacons provide retailers with insightful analytics on the customer’s purchase behaviour and dwell time.
- It also measures the frequency of a customer’s visit to the store, the busiest section and the time spent by a customer at a particular section. For a retail business, this information is highly relevant to improve the service.
Did you know for 69% of the customers their choice of a retailer is influenced by where they earn customer loyalty and reward points?
So, if you’re looking to engage with your shoppers, you better gain insights about their shopping habits and give the shoppers what they want.
Cashless transaction through beacons
Customers detest waiting in a serpentine queue at the payment counter. In retail stores using beacons, shoppers can purchase in real-time via smartphones without worrying about carrying wallet or credit cards. This will ensure a hassle-free shopping experience for the customers.
Popular brands such as Danske Bank, Hailo Taxi, Coachella 2016 and PaidEasy are leveraging beacons to initiate safe, quick, and easy mobile-based proximity payment solutions.
There’s also, TruBeacon, a service platform that helps retailers to manage, engage and provide payment options to the shoppers.
The challenges ahead…
Though beacons have potential to win back customers into the retail stores, it also comes with its own set of challenges. So, it’s extremely important for retailers to come up with proper strategies before implementing beacon programs in the stores.
Here are the most common challenges of beacon technology:
- App installation
Smartphones have played a crucial role in popularizing beacon technology. A consumer needs to install the app on his/her smartphone to activate the beacons. In simple words, you will need a beacon-enabled app to enjoy the facility. Now, why would a customer install an app and why would he switch on the Bluetooth when he is near a certain store? Hence, a retailer needs to come up with innovative ideas to motivate the customers enough to download the app. This is surely a big challenge for the marketer. It’s time to put on your thinking cap.
- Battery problem
Beacons send out signals using Bluetooth Smart Low Energy (BLE) radiation to the mobile device of the customers, who also needs to keep the Bluetooth of their phones on. Now, keeping Bluetooth on for a long time eventually results in low battery. Also, since most of the beacons run on battery, it needs frequent replacing and testing.
- Placement issue and limited range
Standard iBeacon has an approximate range of 70 meters and in the case of long range beacons it reaches up to 450 meters. The beacons might become less effective and also result in low battery when the range is more. Also, to get proper signal strength, beacons need to be placed at particular positions. And if there are too many beacons in the same locality, the signals might overlap.
- Management issues
Beacons have no network connection themselves hence there’s no centralized system to manage a network of beacons at the same time. This can be pretty daunting especially in a place where large numbers of beacons are installed. It will take a lot of time and effort to do the manual settings. Also, it is very important to map that proper and contextual content is delivered from a beacon to a particular customer. This too becomes a problem when too many beacons are installed at the same place.
Examples of top retailers using beacon technology
According to ABI Research’s forecast 400 mn., beacons will be deployed by 2020. In February 2016, Retail Systems Research found that nearly a quarter of US retailers had implemented beacons and were satisfied with them. Major retail stores across the world have rolled out beacon technology and the number is growing. Let’s take a quick look at top five retail companies, which have explored this technology.
Macy’s, one of the largest department stores in the US, introduced beacons to 800 stores throughout the country. They partnered with Shopkick, a shopping app, which sends coupons and other discount notifications to the customers once they enter the store.
- Lord & Taylor
Hudson’s Bay Company (HBC), which owns Lord & Taylor, rolled out beacons at 130 Lord & Taylor and The Bay stores in Canada and the US. The store came up with individualized campaigns through beacons for each department, thus enhancing customer experience.
Walmart, the world’s largest retailer, teamed up with GE and launched a special iBeacon trial by using GE lightbulbs to house beacons and send push notifications of discount coupons to customers inside the store. The GE’s beacon equipped LED bulb can track shoppers within the store by using the beacons hidden inside them.
This British supermarket giant had successfully used beacons across its 254 stores. Push notifications are sent to consumers when they arrive within a certain radius of the store so that they can ‘click and collect’. Consumers can place their order online and pick them up in-store.
- American Eagle Outfitters
American Eagle Outfitters partnered with Shopkick and launched beacons in more than 100 stores in the US.
The beacon installed base will consist of 4.5 mn. active beacons overall by year end 2018, with 3.5 mn. of these in use by retailers. Also, alongside the big players, namely, Google and Apple, a number of startup companies will also play a crucial role in the implementation of beacons in the future.
Today, beacons have become more mainstream. But marketers need to come up with proper strategies by understanding the customers’ preferences before implementing beacons to keep the shoppers engaged at the right place and at the right time.
Beacons might be a young technology (2014 saw the inception of beacon applications) but it has already created ripples in the tech world. This convergence of the physical and digital world is considered to be the future of retail. You can love it or hate it, but you can’t ignore it.
In the years to come, we expect virtual beacons to give tough competition to these battery-powered beacons.
According to an article published in the Forbes:
- 53% of users are willing to share their location with stores to receive more information
- 57% of users are open to the idea of receiving location-based ads
- 63% feel coupons are important tools in mobile marketing
- 62% share local deals they find interesting with their friends
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