Beacons Bring the Online Experience to Offline Shopping
It's an inevitable truth that technology, especially mobile, has fundamentally transformed the retail shopping experience.
For the last several years, mobile has contributed to the continued decline of brick-and-mortar sales, while online shopping steadily ticks up. For example, during the 2013 holiday shopping season, U.S. retailers received only half the holiday foot traffic compared with just three years ago, according to ShopperTrak. But while we saw story after story after story eulogize the American shopping mall in 2014, a new, more uplifting trend is also emerging — one where online and offline shopping coexist rather than compete.
Technology, the traditional culprit behind the online vs. offline divide, is instead unifying the two factions for the benefit of retailers and consumers alike. Front-runners in this trend include Rebecca Minkoff's connected store, Nordstrom's smart mirrors and Simon's smart malls. We're at a very exciting time where retailers are beginning to explore how technology can be used to not only supplement the offline shopping experience but enhance it.
Forrester calls this trend a "mobile mind shift," a new consumer expectation that they can receive immediate, contextual information to help them make decisions right on their mobile device. In fact, Forrester found that "one in five consumers expects to be able to pick up their mobile phone and do anything from getting store hours to price comparisons to who has what in inventory."
In order to meet rising consumer expectations, we've seen one technology distinguish itself as an easy-to-implement and cost-effective way to transform an otherwise traditional physical shopping space into a connected store: beacons. If you're unfamiliar, beacons are small, waterproof, bluetooth modules that enable messages to be distributed to a mobile device. Messages can range from in-store coupons to Apple passes to information about products.
Marketing communication lives on a chain of technology services, audiences and social networks, and the creative experts that initiate the messages. For beacons to be successful, they must seamlessly integrate with a brand or retailer's existing marketing strategy. The availability of proximity devices shouldn't fundamentally reinvent campaign messaging. As the last link in the chain between brand and consumer, beacons should be flexible and adaptable to the strategy that the organization and its team have invested in. Tweets, posts and videos are all appropriate messages for proximity marketing. Anytime brands can use familiar communications platforms in proximity, the familiarity is comfortable for the consumer and shifts the focus from the device to the message.
From distributing mobile coupons to updates on special sales to promoting new inventory and improving customer service, beacon technology allows retailers to engage shoppers at optimized times when it's contextually appropriate. Beacons are mutually beneficial for merchants and consumers; merchants can easily target their offerings to consumers who have opted in to receiving communication, and consumers can discover new experiences they wouldn't have known otherwise.
Customers can also personalize the types of messages they receive to ensure they're relevant to them, while blocking out messages that are outside of their interests. Beacons go much further than couponing, however. Never before have retailers had such an intimate way to communicate with consumers via two-way communication. Previously, advertisers could share messages with consumers; beacons allow consumers to either respond to communications or proactively communicate with the retailer.
According to marketing consultancy Brandology, half of the top 100 U.S. retailers tested beacons in 2014. This includes McDonald's, Macy's, Lord & Taylor and American Eagle. These companies are already seeing success with beacon technology. McDonald's recently integrated beacon technology in 17 franchise locations in Columbus, Ga. During the four-week trial, sales of the McChicken sandwich and McNuggets increased 8 percent and 7.5 percent, respectively, from the previous month. In this example, beacons proved to be the ultimate engagement tool, making it easier for McDonald's to cater to customers’ tastes, preferences and behaviors, resulting in more value and enjoyment in the dining experience.
According to Forrester, 61 percent of U.S. online consumers access the internet through their mobile phone in-store, suggesting we're at the tip of the iceberg in terms of potential for beacon messages to reach consumers in a retail setting. For merchants, this provides a wealth of opportunity to better serve consumers, answer customer service inquiries and more via mobile.
According to the Spark Report, by 2017, roughly half of all in-store transactions will be completed via mobile devices. With this shift to mobile, the focus on security naturally follows. Beacon providers make protection of user privacy and information an utmost priority. Users have complete control of the communications they receive and the information that's transmitted.
Brick-and-mortar may seem like the most natural starting point for beacons, but for beacon providers, the possibilities are both exciting and endless. For example, looking beyond beacon applications in retail will be a key turning point in 2015. As the Internet of Things continues to grow, beacons will become a more common thread between devices and consumers.
From enhancing public services (e.g., hyperlocal crime alerts) to home automation to enriching commercial communities, beacon technology fundamentally changes the way consumers engage with information, and widespread adoption provides a wealth of new and interesting possibilities.
Robert Hanczor is the CEO of Piper, a provider of beacon technology.