The location-based technology of beacons is a relatively recent newcomer in the retail scene (since 2013). Beacons provide an additional route for interacting with shoppers in real-time via their smartphones as they move around in stores and malls. Foremost, this technology is about marrying between the physical and the digital (virtual) spaces to create better integrated and encompassing shopping experiences.
It is already widely acknowledged that in-store and online shopping are not independent and do not happen completely separate from each other; instead, experience and information from one scene can feed and drive a shopping experience, and purchase, in the other scene. In particular, mobile devices enable shoppers to apply digital resources while shopping in a physical shop or store. Beacons may advance retailers and shoppers another step forward in that direction, with the expectation to generate more purchases in-store. The beacon technology was received at first with enthusiasm and promising willingness-to-accept by retailers, but these subdued in the past year and adoption has stalled. A salient obstacle appears as consumers remain hesitant and cautious about letting retailers communicate through beacons with their smartphones and the implications it may have on their privacy.
In essence, beacons are small, battery-powered, low-energy Bluetooth devices that function as transmitters of information — primarily unique location signals — to nearby smartphones with an app authorised to receive the information. The availability of an authorised app (e.g., retailer’s, mall operator’s) installed on the consumer’s smartphone (or tablet) is critical for the communication technology to function properly. Upon receiving a location signal, the app is thereby triggered to display location-relevant content for the shopper in-store (e.g., product information, digital coupons, as well as store activities and services).
Additional requirements may be in force such as the retailer’s app being open during the shopping trip or that the shopper consents (opts-in) to allow the app receive information from beacons, but these do not seem to be necessary or mandatory conditions for the technology to work (e.g., an app may be set with ‘approval’ as default). Ambiguity that seemingly prevails about the extra requirements could be one of the sour points in the technology’s implementation. On one hand, the application of beacons is more ethical when setting up at least one of these requirements, and should endow it with greater credibility among consumers. On the other hand, any additional criterion for access of beacons to smartphones — assuming the app is already installed — could limit further the number of participating shoppers and reduce its marketing impact.
Only smartphones (and tablets) support apps, not any mobile phone. It should not be taken for granted that everyone has supporting smartphones, hence raising another possible limiting requirement on access for beacons (though in decline in developed countries). Another problem, yet, concerns the distinction between Apple iPhones operated with iOS and smartphones of other brands operated with Google’s Android — beacons have to work with either type of operating system and compatible apps but they do not necessarily do so (e.g., iBeacons are exclusive for Apple’s own mobile devices).
There are some more variations in the application of beacon technology in retail. Beacon devices may be attached to shelves next to specific product displays or to fixtures and building columns in positions aimed at capturing smartphones of shoppers moving in a close area (e.g., an aisle). If the beacon is associated with a particular product, the shopper may engage using the app by actively approaching the phone to the beacon. Otherwise, the app communicates with the beacons without shoppers taking any voluntary action. Furthermore, some applications of beacon technology suggest sending information other than location signals from the beacon, such as product-related information, and receiving customer-related information by the beacon from the smartphone.
Reasonably, retailers would be interested first in applications of the technology for practical marketing purposes in their stores. However, beacon technology may also be utilised in research on shopper behaviour, a purpose now appreciated by many large retailers.
Marketing Practice in Retail
The instant sales-driven idea of application of beacon technology evoked by retailers is to introduce special offers, discount deals and digital coupons for selected products as shoppers get near to their displays. Notwithstanding this type of application, location-based features and services enabled via beacons can be even more creative and useful for shoppers, and beneficial for the retailers.
Relevance is key in achieving an effective application of the technology. Any message or content must be relevant in time and place to the shopper. That is, the content must be related to available products when the shopper is getting close enough to them. The content should not be too general in reference to any product in the store but to products in a section of the store where the shopper passes-by. Triggering an offer for a product just after the shopper entered a store is less likely to be effective, unless, for example, there is a special promotional activity for it in a main area of the floor. The retailer should not err in introducing an offer for a product item that is not available in the specific store at that time. Furthermore, if the app can link product information with customer information, it may be able to generate better content that is both location-relevant and personalised. The app could make use of accessible information on personal purchase history, interests and demographic characteristics. This higher-level application surely requires greater resources and effort of the retailer to implement.
The beacons’ greatest enemy could be their use for bombardment of shoppers with push or pop-up messages of offers, deals, discounts etc. This practice is suspected as a major fault in the early days of the technology that may be responsible for the slowdown in adoption lately. There could be nothing more irritating for a shopper if every few meters walked in the store he or she is interrupted by a buzz and message of “just today offer on X” that appears on the smartphone’s screen. Retailers have to be selective lest customers will avoid using their apps. It is much more important to produce adaptive, relevant and customer-specific messages and content overall (Adobe, Digital Marketing Blog, 4 February 2016).
The grocery retail chain Target, that launched a trial with beacons in 50 US stores in the second half of 2015, committed, for instance, to show no more than two promotional (push) messages during a store visit (TechCrunch.com, 5 Aug. ’15).
More intelligent and helpful ways exist to apply the beacon technology in interaction with the app than promotional push messages. First, content of the “front page” of the app can change as the shopper progresses in the store to reflect information that would be of interest to the shopper in that area of the store (e.g., show hyper-linked ’tiles’ for nearby product types). Second, beyond ‘technical’ information on product characteristics and price, a retailer can facilitate shopper-user access to reviews and recommendations for location-relevant products via the app. Third, if the shopper fills-in a shopping list on a retailer’s app (e.g., a supermarket), and the app has a built-in plan of the store, it can help the shopper navigate through the store to find the requested products, and it may even re-order the list and propose to the shopper a more ‘efficient’ path.
Beacons are associated mostly with stores (e.g., department stores, chain stores, supermarkets). However, beacons may also be utilised by mall operators where the ‘targets’ are stores rather than specific products. An application programme in a mall may command collaboration with the retailers (e.g., store profile and notifications, special promotional messages [for extra pay], content contributions).
In another interesting form of collaboration, the fashion magazine Elle initiated a programme with ShopAdvisor, a mobile app and facilitator that assists retailers in connecting with their shoppers through beacons. As an enhancement to its special 30th anniversary issue, Elle launched a trial project in partnership with some of its advertisers (e.g., Guess, Levi’s, Vince Camuto) to introduce their customers to location-based content with the help of ShopAdvisor (focused on promotional alerts)(1).
Consumers are concerned about tactics of location-based technologies like beacons that get intrusive and even creepy; they become adverse towards the way such apps sometimes surprise them (e.g., in dressing rooms). Indeed, only shoppers who installed an authorised app can be affected, but for customers who installed such a retailer’s app, with other benefits in mind, it can be disturbing at times. The hard issue at stake is how the app alerts or approaches its shoppers-users with location-based messages. Shoppers do not like to feel that someone is watching where they go.
The shopper may believe that if the app remains closed on the smartphone he or she cannot be approached. But if, as reported in CNBC News, a dormant app can be awaken by a beacon signal, this measure is not enough. This may happen because the shopper previously allowed the app to receive the Bluetooth signal or the app “assumed” so as default. The shopper must take an extra step to disable the function at the app-level or device-level (Bluetooth connectivity). Retailers should let their customers opt-out and be careful in any attempt to remotely open their apps on smartphones (so-called “welcome reminders”), because imposing and interfering with customer choices may get the opposite outcome of removing the app.
The app may display ‘digital’ coupons for the shopper to “pick-up” and show later at the cashier (or self-service check-out). It is reasoned that if coupons are shown at the right time shoppers will welcome the offer, no resentment. The manner shoppers are alerted can also matter, by not being too obtrusive (e.g., “Click here for coupons for products in this aisle”). Shoppers told CNBC News that if digital coupons were offered to them by the app just when relevant, they would be glad to use this option, being more convenient than going around with paper coupons, but they would want the ability to opt-out.
Shopper Behaviour Research
The beacon technology may further contribute to research on shopper behaviour in stores or malls. Specifically, it may be suitable for collecting data of shopper traffic to be used in path analysis of the shopping journeys. The information may cover what areas of the store shoppers visit more frequently, how long one stays in a given area, and sequences of passes between areas.
Nonetheless, there are methodological, technological and ethical factors retailers and researchers have to consider. At this time, there are distinct limitations to be recognized that may inflict on the validity and reliability of the research application of beacons. Ethical issues discussed above regarding the provision of access of beacons to mobile apps furthermore apply in the research context.
This methodology involves tracking the movements of shoppers. Beacon technology may record frequency of visits in each area of the store separately or it may track the presence of a particular shopper by different beacons across the store. A beacon may also be able to send repeated signals at fixed intervals to a smartphone to measure how long a shopper remains in a given area. However, this type of research is not informative about what a shopper does in a specific location as in front of product shelves, and thus it cannot provide valuable details on her decision processes. Hence, retailers cannot rely on this methodology as a substitute for other methods capable of studying shopper behaviour more deeply, especially with respect to decision-making. A range of methods may be used to supplement path analysis such as interviewer’s walk-along with a shopper, passive observations, video filming, and possibly also in-store eye-tracking.
An implementation of the technology for research would require a comprehensive coverage of the premises with beacons, perhaps greater than needed for marketing practice. It should be compared with alternative location-based technologies (e.g., Radio Frequency Identification [RFID], Wi-Fi) on criteria of access, range and accuracy, and of course cost-effectiveness. For example, the RFID technology employs tags ( transmitters) regularly attached to shopping carts — if a shopper leaves the cart at the end-of-aisle and goes in to pick-up a couple of products, the system will miss that; smartphones, however, are carried on shoppers all the time. Beacon technology may have an important advantage over RFID if location data is linked with customer characteristics, but this is a sensitive ethical issue and at least it is imperative to ensure no personal IDs are included in the dataset. All alternative technologies may also have to deal with different types of environmental interferences with their signals. Access would have both technical and ethical aspects.
A mixture of problems emerges as responsible for impairing the utilisation of beacon technology, according to RetailDive (online news and trends magazine), mainly consumers who do not perceive beacon-triggered features as useful enough to them and retailers troubled by technical or operational difficulties. Among the suggestions made: encourage pull of helpful information from beacons by shoppers rather than push messages, and speed-up calling staff for assistance via beacons (RetailDive, 17 December 2015). A recent research report by Adobe and Econsultancy on Digital Trends for 2016 indicates that retailers are becoming more reluctant to implement a geo-targeting technology like beacons this year compared with 2015 (a decrease in proportion of retailers who have this technology in plan or exploring it, against an increase in proportion of those who are not exploring or do not know). Conspicuously, there seems to be much more optimism about high effectiveness of geo-targeting technology at technology and consultancy agencies than among retailers, who seem to be much more in the opinion that it is too early (2). Agencies could have better understanding of the field, yet it signals an alarm of disconnect between agencies and their clients.
There is potential to beacon technology with clearly identifiable benefits it can deliver to retailers and consumers. It is still a young technology and requires more development and progress on various technical, applied and ethical aspects. Promotional messages are important tools but must be used in a good and sensible measure. A retailer cannot settle for a small set of fixed messages. It has to develop a dynamic ‘bank’ of messages, large enough to be versatile over products, (chain) stores, and consumer groups, and maintain regular updates. However, retailers have to develop and provide a more rich suite of clever content and practical tools based on location. Consumers will have to be convinced of the benefits enabled by beacons, yet feel free to decide when and how to enjoy them.
Ron Ventura, Ph.D. (Marketing)
(1) “App Helps Target Shoppers’ Location and Spontaneity”, Glenn Rifkin, International New-York Times, 31 December 2015 – 1 January 2016.
(2) “Quarterly Digital Intelligence Briefing: 2016 Digital Trends”, Adobe and Econsultancy, January 2016 (pp. 24-25). The findings are considered with caution because of relatively small sub-samples of respondents on this topic (N < 200).