Beacon Technology In Retail

Posted by Andrea Baker on

Renowned retailer Macy's hit the headlines last year when they offered customers using their app the opportunity to win up to US$1 million in prizes simply by walking through their doors. It was the dawn of a new age of shopping where the online and real worlds collide, and it came to us courtesy of beacon technology.

As Macy's demonstrated, beacon technology is providing new paths to engage with customers within and beyond a store front, targeting them with promotions, speeding up the transaction process and rewarding them for their loyalty.

This is how beacon technology works, and the benefits it provides.

The technology

In simple terms, beacon technology involves communication between a small device inside a store and a customer's smartphone or mobile device. The beacons use Bluetooth Low Energy (BLE) wireless technology to send messages via a retailer's smartphone app when a customer's phone is in range.

About the size of a sticker, the beacon can be positioned on walls or other objects. It can pinpoint where a customer is in-store and alert them to special offers, or speed up the checkout process. The customer has control of the interaction via their choice to download the app and they can opt out at any time.

beacon technology in retail

Industry take-up

First introduced in 2013 by Apple and its iBeacon, beacon technology is not new, but its recent rapid take-up is. According to the industry is currently exploding, jumping from $4 billion generated sales in 2015 to an estimated $44 billion this year.

This mass growth has been driven by big name retailers like Target, Macy's, Timberland and Saks. explains Target introduced the technology in 2015, trialing it in 50 of its 1792 US stores, and already 25 million customers are using the app, with app adoption growing by 86 per cent last year.

How it can be used

Brand awareness
According to a study commissioned by research and analysis company Forrester, many retailers develop apps, but awareness and adoption is generally poor. Their statistics indicate:

• 60% of people had two or fewer retail apps on their phone
• 3% had more than 10
• 85% of time on a smartphone is spent using apps
• But of that only 5% spent time on retail apps

But if retailers develop apps which include an awareness of how an individual uses their store they can offer their customers tangible benefits like loyalty points, or product offers.
The app is then serving a purpose of providing better, more informed customer service. The app becomes the must-have item for better utilising that store, and the retailer becomes known for their premium shopping experience.

Customer service
By utilising the beacon and an app, the retailer can provide targeted messages to a customer's phone while they are shopping.

Say, for example, a customer is approaching the cosmetics' counter of a department store. The beacon in that region can send a message to the app on the customer's smartphone telling them about current cosmetic product promotions or product features.

While it's important retailers resist the temptation to bombard a customer with messages, says it can also enable a whole range of customer service opportunities like helping a customer find what they are looking for or providing the location of the nearest sales associate for face-to-face assistance. 


Customer engagement
Because beacons are positioned around a store, they can tell the retailer where a customer is and possibly what they are looking at. For example, they can alert a retailer that a customer has visited their store six times in the last three weeks, looking specifically in the kitchen appliance sector.

That provides the opportunity to alert that consumer of sales or product opportunities specific to their interests.

Not only that, but Harvard Business Review points out; retailers positioning beacons near their entrance can lure customers in with promotions such as limited-time offers or discounts for app users.

It also provides a bevy of opportunities for loyalty rewards such as points or product giveaways based on how many times a customer physically visits a retailer. These rewards can be general or tailored to that specific customer's interests.

Store design
Not only does beacon technology furnish retailers with information about how often customers visit, which parts of the store they look at and which stores in a chain are visited most frequently, it also has the potential to provide highly useful information relating to store layout, like what areas of a shop receive the most traffic, when.

That has massive potential for the redesign of a shop to ensure customers have a meaningful shopping experience with exposure to the most goods.

Faster checkout
With customers embracing proximity payment technology more every day, it's hardly surprising beacons have major potential when it comes to utilising their capabilities to allow financial transactions via an app.
Or alternately, in busy times, retailers can notify customers in-store of additional checkout locations with a smaller queue.

Only just beginning, beacon technology is in its retail pioneering days as many merchants experiment how best to utilise the technology and design their apps. But with its uses only limited by the retailer's imagination, beacon technology is set to become the shining light in the shopping experience.