May 4, 2023
Retail beacons are small wireless battery-run sensors that send a one-way signal to nearby smart devices to communicate a message from a certain location. A proximity-based retail software solution, they gather information about customers’ in-store movements and personalize their buying experience.
The technology was first released by Apple in 2013 and further installed in multiple Apple stores. Since then, the beacon technology has become an invaluable asset for brick-and-mortar stores, converging the offline with the online to provide personalized in-store customer experiences. Let’s explore how beacon technology works, its advantages and limitations, and how retailers can use it to level up customer experience.
Beacons send Bluetooth low energy (BLE) signals to nearby smartphones. The customer needs to pre-install a store’s mobile app to pick up the signals and send location-specific information to the store’s server, such as products or the department the customer has just passed by. Pairing the information about the customer’s current location with the customer profile data, the app triggers specific actions, for example, sending highly personalized promotions, encouraging visitors to make a purchase.
Image title: How beacon technology works
Data source: shopify.com — Beacons in Retail: How To Attract More Shoppers With Proximity Marketing, 2023
Beacons provide businesses with unique ways to learn more about their customers and engage with them on different levels.
Beacons can gather data about store areas with the most and least foot traffic, levels of shopper engagement with various categories or products, and details about first-time and repeat customers. Processing this data with retail business intelligence, retailers can improve stall and merchandising layouts, decrease wait times at checkouts and other customer touchpoints, and enrich shopper profiles for better customer segmentation and retargeting campaigns.
Point-of-sale systems can use beacon technology to enable frictionless mobile payments. Once in a store, a visitor’s payment app identifies a beacon signal and notifies the POS system that the customer is there. Then, during the checkout, the store app initiates the payment and forwards it to the nearest terminal, where the customer completes the purchase.
Beacons also enable mobile self-checkout through BLE. In this case, beacons help determine a customer’s location, and if they are in the allowed proximity range, trigger a mobile payment terminal to facilitate the purchase without involving store personnel.
When Amazon decided to go offline, they opened cashier-less stores to abolish the concept of queues. In such stores, customers can take what they want and then just walk out of the store with their Amazon account billed after they leave. Among many other proximity technologies, in-store beacons are an essential component in the Amazon Go infrastructure.
Target’s store app features a GPS-connected digital shopping cart. Shoppers can create shopping lists in the app, and once they are in-store, the app guides customers to where those items are located. The app also has cross-selling features, offering products complementing those in a digital shopping cart. The app updates a social media-like newsfeed with the latest product recommendations or coupons based on the customer’s location.
Image title: The Target app offers deals and product recommendations based on the department a customer is visiting.
Data source: corporate.target.com — Testing, Testing, 1,2,3: Beacon Technology Arrives in 50 Target Stores
As part of their multichannel retailing strategy, Macy’s installed 4,000 beacons across all their stores in the US. The app features a store directory, product lists, beacon-powered in-store deal alerts, and special event notifications. To engage customers during the holiday season, Macy’s used a beacon-triggered mobile game that pushed notifications to shoppers near the store’s beacons. The messages encouraged shoppers to participate in the instant win game with a chance to win $1 million in Macy’s gift codes and other valuable prizes. As a result, the proximity targeting helped broaden the reach of the promotional campaign.
Image title: Macy’s in-store app page
Data source: appstoreapps.com — Macy’s
Nordstrom, a Seattle-based retailer, connects online and in-store shopping experiences using beacon technology. Nordstrom’s mobile app sends beacon-enabled notifications to inform customers when items added to the shopping cart are available in the store the customer is passing by. Through beacons, Nordstrom also offers online shopping options for store visitors and shows recommendations based on the customer’s preferences.
Image title: Nordstrom’s mobile app and near-store notifications
Data source: clickz.com — Nordstrom beacons
Teamed up with General Electric, Walmart equipped LED bulbs within its stores and parking lots with discreetly placed beacons that track visitors and push targeted notifications with discounts, coupons, promotions, product information, and store maps. The BLE beacon solution allowed the retailer to reduce costs and avoid purchasing standalone beacons.
Image title: Indoor location-based services using LED lighting
Data source: 9to5mac.com — GE integrates iBeacons in new LED lighting fixtures rolling out in Walmart & other retailers
The pharmacy chain adopted beacon technology to deliver helpful information to customers. Instead of promo coupons, they send real-time service notifications, like a reminder to refill or pick up a prescription, when customers enter a pharmacy. 72% of shoppers then reported such push notifications improved their in-store experience.
Image title: CVS offers multiple ways to manage prescriptions, including actionable in-store beacon-powered alerts
Data source: cvsspecialty.com — Know the status of your prescription order cvsspecialty.com — All-around convenience
The high-end retail chain deployed an iBeacon BLE solution in its three locations in the US. The retailer aimed to promote visibility for holiday in-store events like trunk shows, guest designer presentations, and makeup artist appointments happening on the same day a customer is at the store. Store visitors get notifications from beacons about the event time and in-store directions to the venue. The alerts are location-based and promote different events depending on the departments a consumer is shopping around. To facilitate the adoption of the beacon technology for the customers, Neiman Marcus’s sales associates help shoppers download the mobile app and get them acquainted with alerts.
Image title: Neiman Marcus’s beacon-powered push notification
Data source: retailtouchpoints.com — Neiman Marcus Promotes In-Store Holiday Events With Beacons
Retail IoT solutions like beacons enhance in-store shopping experiences and allow retailers to establish a deeper connection with the customers, thus bringing multiple benefits.
While cell towers, Wi-Fi, and GPS can accurately position devices up to 5 meters, beacons can detect users’ locations precisely, down to centimeters, thus increasing the relevance of your messages.
Data collected from beacons helps improve product listings and in-store layouts, prevent queues, increase coupon usage, enhance customer care, and make the shopping trip convenient for customers.
Smart beacons help brick-and-mortar retailers achieve personalization levels comparable with those in ecommerce. Retailers can send out timely offers, discounts, and shopping recommendations, tailored to customers’ demographics and shopping habits.
Retailers can send ads based on the customer’s proximity to the store, reaching out at the right time and place. They can also use beacons for retargeting and offer products previously viewed by the shoppers.
Beacons help turn a store’s mobile app into a valuable and engaging tool for shoppers, increasing app retention and customer engagement.
With the knowledge about the staff’s activities, store owners can optimize each employee’s workload in real-time, establish more customer-oriented service processes, and improve training, increasing overall staff productivity and customer satisfaction.
Sending navigation prompts or triggering the opening of an interactive map, beacons can steer users across aisles to products on their electronic shopping list or offer a personalized route based on their previous purchase history.
Beacons enable personalized experiences online through personalized notifications and loyalty benefits and offline through in-store promotions. At the same time, beacons provide insights into the correlation between advertising efforts and offline conversions.
Beacons are simple devices, but there are still some challenges with this technology that companies should consider before incorporating it into their proximity marketing strategy.
Depending on the proximity of other beacons or the nature of surrounding materials, beacon signals can be easily reflected or absorbed. As a result, some parts of your store can become blind spots, resulting in beacons pushing irrelevant notifications to users.
Due to fluctuations in Bluetooth signal strength as well as intermittent coverage of cell phone antennas and beacon signals, some notifications can come with a delay, which undermines their relevance and the overall concept of real-time experience.
Popular apps like weather or news can contain beacon-tracking codes that retailers can use to track a wider audience than their store app users. In defense, companies say users can always opt out of location services. However, it’s not rare for companies to give customers incomplete and misleading explanations when asking for their informed consent.
For beacon marketing to be effective, several conditions should be met. Consumers should download and install the store’s mobile app, have their smartphone with Bluetooth on when visiting the store, and agree to receive push notifications. Even if these conditions are met, users can still mute notifications or opt out of them anytime.
When shopping, most customers don’t check their phones every minute, carrying them in their pockets or purses instead. So it can be difficult to engage passers-by with beacon-triggered alerts. In addition, shoppers can pass by a store or department too quickly for a notification to work in time.
Users can start having concerns about their data security. Most people don’t mind exchanging their data for highly personal experience. However, in some cases, they can try to shield against constant tracking and protect their data.
With today's world shifting to mobile-first, beacons play a significant role as a customer experience technology for brick-and-mortar businesses. While people heavily rely on notifications from their devices, retailers can use beacons as a bridge between the offline and online realms.
At Itransition, we help retailers set up beacon-powered proximity campaigns to achieve their specific marketing goals and smoothly adapt to the offline-to-online transition.
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