There are currently no items in your cart
Beacons: Don’t Believe the Hype
Beacon technology failed to really take off in 2015, despite significant hype and some high-profile pilots. Will 2016 be the year of the beacon?
Beacons were supposed to be the next big thing of 2015. But what happened? For a variety of reasons the uptake and success of retail beacon technology has been thoroughly underwhelming, with various experts labelling the technology as ‘hype’, at least in its current iteration.
For those not already familiar, beacons are Bluetooth Low Energy transmitters that can find and interact with smartphones via apps. The location-based technology has been touted as a new way for brands to target offers and deals at shoppers as they browse products in-store or to give shoppers an extra push to come in-store or complete a purchase.
However, retail is an industry of fads, and beacons are still struggling to prove that they are anything more than a fad.
While some pundits maintain that beacon ubiquity is a matter of time, others are arguing that there’s still a lot that needs to be sorted out before the technology can prove itself.
Despite the questions about beacon utility for shoppers and retailers and functionality of the technology, a number of major retail brands and shopping centre operators have been experimenting with beacons over the past 12 months. Major brands like Macy’s, Apple, IKEA, McDonald’s and Target, and shopping centre operators like General Growth Properties in the US and Westfield in Australia, have all recently signed beacon contracts.
In mid-2015, ABI Research said that beacon manufacturers will ship more than 400 million devices globally by 2020, representing a massive increase from today’s three million devices.
Given how fad-driven retail is, especially with regard to new technologies, it’s hard to really put much stock in that prediction. Really, who’s to say that beacon technology won’t be totally superseded in six months’ time? But the big-name brands experimenting with beacons seems to suggest that the technology has legs; it’s just not clear yet how strong those legs are.
A 2015 survey by Forrester Research found that only three percent of retailers are using beacons, with only 16 percent planning to use them in the foreseeable future. Together with the big brands already mentioned, major tech names like Facebook, Google and Apple are currently running beacon programs. Despite these high-profile beacon tests, companies that sell beacons are not yet able to point to a big success story.
To further hamper broad beacon uptake, a number of retailers have chosen to keep their beacon pilots quiet. Together with push marketing, beacons also have the ability to collect significant shopper data. However, people are becoming increasingly concerned about online privacy and data retention, and many retailers are worried that consumers may perceive beacon data collection as invasive. The decision to keep beacon pilots quiet is not aiding the broader rollout of the technology.
Retailers that have initiated marketing-based beacon programs have encountered two major roadblocks. For in-store beacon systems to work, shoppers must a) download the store app and b) ensure Bluetooth is activated on their smartphone, and these two factors are largely out of a retailer’s control. Furthermore, retailer apps are generally not among the most popular apps, and it’s unclear what percentage of shoppers either leave their smartphone Bluetooth activate or would remember to activate it when entering a store.
At this stage, beacon tech is about customers opting in. Therefore, a retailer or brand needs to provide a shopper with an adequate incentive to opt in. Without this incentive, or even with it, many shoppers may be reluctant to opt in since this will open shoppers up to extra marketing content, which may be unwelcome, and will allow access to personal information, which shoppers are increasingly wary of.
In short, the incentive to opt in must be significant enough to outweigh these shopper concerns. But at this stage, retailers simply aren’t sure what incentives customers are looking for and there seems to be a disconnect between what advertisers want to provide, what the technology is capable of, and want shoppers actually want.
Senior Research Analyst Miya Knights of IDC Retail Insights foresees the value of beacon technology being realised three to five years down the road, as there are hurdles in the way preventing a seamless experience, such as stores being Wi-Fi enabled or consumers having to download an app and accept permissions.
“There are so many things that have to be in place before retailers can start to see the value of that interaction with the customers in the store. That includes the infrastructure and technological components, together with the engine to execute personalised offers,” she said.
Brands or advertisers would love to be able to send a personalised offer to a customer right as the customer is looking at that product. In most cases, however, the technology is not yet evolved enough to reliably target specific customers in specific departments or aisles. For example, if a brand wants to send a coupon for men’s shoes to a shopper browsing for shoes, it needs to be sure the beacons can direct the deal to the shoppers in the correct department. Irrelevant deals or messages increase the likelihood of shoppers opting out or, worse still, leaving the store and not coming back. So the risks can be significant.
Some good news
But it’s not all bad news for beacon enthusiasts. As testing continues, retailers will get more of a sense of how to best use the technology and, more importantly, how shoppers want to use it. In reality, beacon tech has not really bene sufficiently refined to offer a clear value proposition to the shopper.
Some pundits have suggested that using beacons for push marketing may have limited potential.
“I think that what retailers are discovering is that beacons may not simply be yet another channel through which promotion and messaging get shoved down to shoppers. I think we’re going to mature beyond that,” retail futurist Doug Stephens told Retail Dive.
“Retailers might recognise that beacons are not so much a push platform, but a pull platform,” said Stephens. “They should be giving consumers the ability to pull info from a beacon at their behest. They can use that interaction as a means of measuring the desire that consumers are bringing, how they’re using the store experience.”
Rather than straight-up push marketing, beacons could be used to facilitate two-way communication between shoppers and retailers. They could also increase loyalty program sign-ups, app downloads and in-store traffic.
For Adam Silverman, Principal Analyst at Forrester Research, beacons are “absolutely not hype. But the current iteration of beacons today and the influence on retail is completely overhyped. The main reason is because we as retailers haven’t yet found the right use cases for them.”
So where does that leave us? In 2016, it seems unlikely that beacon technology uptake will be as strong as some tech companies might want us to think. Most likely retailers will assess their strategies, beacon pilots will become more focused on what shoppers want, more creative and innovative uses for the technology will emerge.