Can Beacons Convert Shoppers In-Store?

For Bluetooth low energy (BLE) chips – aka beacons leveraging Bluetooth 4.0 – the potential to convert in-store shoppers and ring registers is seemingly huge. But the current reality is that shoppers are generally unfamiliar with the technology, and there are more pressing issues for solution providers to address around scale, security and how to use it.Just how much the potential of beacons settles into an effective point-of-purchase solution, time will tell. But it will likely be 2016 before we know, as 2015 appears to be a year of test and learn.Retailers need to take baby steps, according to Erik McMillan, founder and chief executive officer of Shelfbucks, which offers an in-store beacon promotion platform that works via retailer apps. In October 2014, the company teamed with Menasha Packaging to embed beacons into displays. “We may do 3,000 displays for a CPG to learn, look at the data and see how they engage,” McMillan says. “After piloting on a few displays, then 2016 is about scaling what’s learned in 2015.”Jon Kramer, chief marketing officer at RockTenn Merchandising Displays, says his company will be testing throughout 2015 with several retailers and manufacturers. RockTenn will use beacons to track display compliance and shopper behavior within its learning labs, in a Lowes Foods in North Carolina and as part of a relationship with the Center For Advancing Retail Technology and the National Grocers Association. “Based on what we are now seeing in the marketplace, testing will probably take precedence over the next 24-36 months prior to more robust shopper and retail utilization,” Kramer says.Another in-store solutions provider, RTC, is testing beacons this year with brands and retailers “to understand the limitations and ideal use cases for integrating beacons into our clients’ retail strategies,” says Tony Bynum, director of strategy and innovation. “We have a roadmap for incorporating beacon compatibility into our ‘Edge’ line of shelf-edge, interactive displays and commercial tablets.”As of now, Bynum believes there is too small of a population of consumers carrying BLE-capable devices to interact with beacons. He says the technology hasn’t gone beyond regional testing. “Used alone, as a measure of POS performance, it’s inconclusive as to the effectiveness of beacons in their ability to directly impact register ring.”Kramer says beacon technology is currently in a “Wild West stage,” with too many suppliers fighting for critical mass. “To be successful, the industry will need to embrace a standard delivery system, resource and format. Not doing this may result in both shopper confusion and frustration, as they need to download and interface with multiple apps and formats based on the retailers they frequent.”Understanding the TechnologyRetailers are confronted with many beacon platforms. Among them:Macy’s has more than 4,000 beacons being used with Shopkick;Birdzi powers beacons through apps for regional grocers;Swirl runs a beacon platform for retailers such as Lord & Taylor and Timberland;MyWebGrocer offers beacon communication through its apps;inMarket runs a beacon platform in concert with a suite of apps and is testing with brands such as Tyson Foods’ Hillshire Farms and McCormick’s Zatarain’s; andeBay is testing a beacon that centers on payment for PayPal.Retailers also need to decide whether beacons should be in displays or light fixtures and where to locate them in the store, not to mention what to say in their communication with shoppers.Beacon activity took off in 2013 when Apple introduced the iBeacon, its branded version of BLE. The chips are in iPhones and communicate with beacon hardware that’s placed in stores.RTC’s Bynum says that, prior to the iBeacon’s release, brands and retailers were more focused on near field communication (NFC) technology, which at the time was available on very few mobile phones. “Another challenge we saw in the adoption of beacons prior to Apple’s release was that each manufacturer had its own unique spin on the functionality and specifications they incorporated into their products,” Bynum says. “Battery life, range, antenna coverage patterns, and size and form factor vary dramatically, and [those variations] still exist today.”Shelfbucks’ McMillan says he discovered BLE in 2011. Running a company that develops mobile apps for retailers called Best Fit Mobile, he was working on a mobile solution for Philips Healthcare. The non-retailer client needed its sleep apnea patients to have their mobile phones communicate with CPAP (continuous positive airway pressure) machines. Playing with a pre-iPhone 4S device, McMillan found a Bluetooth 4.0 chip that automatically paired an app on a phone to BLE hardware. “Back then, that was game-changing,” McMillan says.Today and going forward, a BLE chip is what it is. The difference comes in how brands and retailers use it. “At the end of the day, all of our beacons are physically the same,” says Charlie Larkin, senior director, technology innovation, GameStop. The retailer has been testing beacons in its stores with Shelfbucks, focusing on two areas: an “entry beacon” to send a welcome message to GameStop app users and transition them from outside of the store to inside; and “product zone” beacons for shoppers to learn about hot products and promotions. With the latter, the shopper holds up a device to a beacon that is visible on signage or marketing materials and gets video game trailers and deals for products in that section of the store, Larkin says.“From a messaging perspective, we’re believers in consumer-initiated interactions, especially early on in the adoption lifecycle,” he says. “This puts the consumer in control of the frequency of interaction, messaging, etc.”However, another tool GameStop is playing with is a “Concierge application” on iPads for store associates. If a consumer opts in for this feature, store staff can be notified when she is present and also receive a look into her loyalty information, including rewards points, coupon eligibility or products she has reserved.As for the register rings, Larkin says GameStop is “actively pursuing the conversion question right now. Our expectation is that by driving awareness – rich product information – and driving visibility to our promotions at shelves will ultimately drive conversion rates up.”Jeff Griffin, executive vice president of retail at inMarket, says Hillshire Brands wanted to test beacons around a new American Craft line of sausages. Griffin says the brand saw a sales lift from a control store test tied to beacon interaction, but he couldn’t release any numbers. Hillshire Farms also saw a 33% increase on brand awareness and a lift in purchase intent that was 20 times greater than expected, Griffin says.Griffin points out that these are advertising metrics. “We are a media platform both for pricing and delivery metrics. We don’t sell directly to trade teams; we work with ad agencies, and they buy on advertising metrics typically.”He says retailers are excited about beacons because it’s a different use of media. They have a lot of ways to talk to a shopper after she leaves: email, SMS or receipts. “Beacons give a retailer a dynamic, mobile way to reach shoppers before they check out.”Larkin says GameStop is still early in its learnings, noting that before the company can focus on conversion, from a consumer perspective it’s about education and adoption. “Most of what we’ve seen so far is the need to continually tweak the technology and ranging configurations on the beacons as we test them in different locations,” he says. “By looking at the versions of Android that our customers are using, for example, we can see the ability to support BLE appropriately is still very difficult.“The other learning is not entirely unexpected – the fact that while technologists and marketers have been talking beacons for a while, it is still a concept that is irrelevant to most consumers. Given our approach of user-initiated interactions, we have created a bit of an education gap that we are working to fill via tutorials in-app and on store shelves. Ultimately, we believe it’s worth the effort.”Potential, Potential, PotentialRockTenn’s Kramer sees the potential, too. “From a retailer standpoint, for the first time, they will be able to understand both shopper traffic patterns as well as shelf purchase conversion. From a supplier standpoint, being able to provide shopper-specific, day-parted offers and communications will finally deliver the promise and value of true shopper marketing programming.” He believes beacons will become an alternative to print circulars and FSI delivery mechanisms. “This will free up funding to drive in-store shopper value add.”Dave Wentker, CEO of Tapcentive, a company that runs controlled beacon and NFC platforms in which consumers tap phones to opt-in and trigger information, says sales come with a new experience. “Instant or progressive rewards, sweepstakes, virtual punch cards and in-store treasure hunts, for example, are different ways to use content to encourage shoppers to stay longer and visit areas of the store they might not explore. This kind of content becomes even more personal and relevant – and more likely to convert at the register,” especially if tied to a customer’s preferences found in a loyalty program, CRM and transactional history.“Smartphone operating system support for beacons is also a work in progress, with more sophistication required to preserve a customer’s battery and better interoperability across Android and iOS,” Wentker says. “It’s quite possible that beacon-assisted shopping will become an accepted and expected part of the broader retail shopping experience.”Shelfbucks’ McMillan says he expects that beacons or technology like it will be baked into every merchandising project a CPG executes in the years to come. “Fifteen years from now, it will be totally different than what we think it will be, but I guarantee that it will have something to do with the smartphone talking to a sensor to have a seamless experience in-store. I’m excited to see where it goes.”For now, it’s about learning. Shelfbucks will launch the first Menasha smart displays for CPG clients this spring. Beacons are integrated into the manufacturing process, paid for by the CPGs. They make a deal, trade dollars, etc., with a retailer, and the buyer approves the display and digital content at the same time, McMillan says.In this first year, Shelfbucks isn’t altering signage on displays. “We’re just going to focus on, ‘Did the display get put up, how many shoppers walked by, and how many shoppers dwelled nearby?’” McMillan says. In Q3 after looking at the data, Shelfbucks will send nudges to shoppers who have the retailer’s app and have been hanging around a display. In Q4, there will be icons on displays so shoppers recognize the ones that are interactive.Griffin says that before any retailer entertains a beacon, there are two critical issues they need to address: scale and security. “When you’re thinking of beacons as a media platform, and I choose those words carefully, whether you’re a shopper marketing team working jointly with the retailer or on the brand back at home base, the first thing you have to guarantee is that the platform you choose has scale to reach as much of the retailer’s shopper base as possible.”And, “the promise of a beacon, the opportunity of a beacon as a broadcaster, is equally matched by the opportunity [for someone else] to take advantage of that beacon. The potential for abuse is as great as the potential for service.”Generally, Griffin says, “retailers are vitally concerned about curating their floorspace. We believe they should be just as concerned about curating their airspace.”

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