Tech Bytes: 3 insights on Facebook’s expansion of Place Tips
The nationwide expansion of the Facebook Place Tips in-store mobile promotion service, complete with free proprietary Bluetooth Low Energy (BLE) beacons, was interesting news. Here are three implications of Facebook’s latest effort to serve as a commercial platform:
Facebook becomes your branded app
Place Tips curates information such as posts from a retailer’s Facebook page and recommendations from friends and delivers it to in-store customers on a targeted, opt-in basis. The service can also deliver product information and other content, although at least for now there is no transactional capability.
Basically, Place Tips lets retailers turn an in-store customer’s Facebook app into their own branded retail app. It’s no secret that consumers are suffering from “app fatigue,” and are only willing to download a certain number of apps and will then only use even fewer. Unless a retailer is one of a consumer’s favorite businesses, the odds of the consumer opening or even downloading their app are slim.
However, Facebook is a near-ubiquitous presence on consumer mobile devices, with many keeping it continuously open. The company is now letting retailers deliver key parts of their branded app experience to a much broader selection of customers, in the process becoming much more indispensable as a customer engagement tool.
A beacon of things to come
Since initial pilot rollout in January 2015, Facebook has recommended proprietary Facebook beacons as the best tool for delivering Place Tips to customers. Facebook is now providing free beacons to select retailers.
Clearly, the social media giant is betting on beacon technology as the future platform of choice for in-store customer engagement. Beacons do not provide the only means of sensing customers or delivering a targeted store experience, but so far they are proving highly effective. Facebook’s endorsement of beacons for Place Tips is another sign of beacons’ growing importance.
In addition, Facebook’s development of proprietary beacons is no accident. Any solution will provide greater functionality when it specifically customized for a certain framework. Facebook beacons are free for now (at least on a select basis), but that may be a temporary effort to ensure a strong existing base.
Other technology providers, and even retailers themselves, may rely more on proprietary beacons to deliver specific customer experiences. This may also lead to issues such as retailers facing a glut of individual beacon implementations to support different aspects of their customer engagement strategy.
Let’s be honest here. For all retailers’ talk of supporting every step of the customer journey and providing shoppers with tools to make informed purchase decisions, at the end of the day retail is about making sales. It is easy to imagine Facebook eventually adding functionality for ordering and purchasing to Place Tips at some point in the future.
This would greatly increase the value of Place Tips to retailers, and also provide a much stronger ROI proposition should Facebook decide to turn Place Tips into a paid service.
Place Tips could wind up becoming an important mechanism in advancing “social selling,” which despite a number of highly publicized efforts has not yet become a major source of retail revenue. Facebook could even divide Place Tips into a “freemium” promotional version supported by third-party ads (which currently are not allowed) and a paid version with transactional functionality.
Ollie’s eyes IPO and 950 stores
Off-price retailer Ollie’s quietly doubled in size the past few years and now the company plans to go public, accelerating growth of no-frills stores it affectionately refers to as “semi-lovely” warehouses.
Ollie’s operates 181 stores in the Eastern U.S. that last year generated annual sales $638 million and net income of $26.9 million.
The company describes itself as, “a highly differentiated and fast-growing, extreme value retailer of brand name merchandise at drastically reduced prices.” Ollie’s contends it is known for its ever-changing product assortment and value proposition of, “good stuff cheap.” T
he assortment found in the typical 34,000-sq.-ft. store includes brand name products in categories such as housewares, food, books and stationery, bed and bath, floor coverings, toys and hardware.
“Our differentiated go-to market strategy is characterized by a unique, fun and engaging treasure hunt shopping experience, compelling customer value proposition and witty, humorous in-store signage and advertising campaigns,” according to Ollie’s registration statement filed with the Securities and Exchange Commission. “These attributes have driven our rapid growth and strong and consistent store performance as evidenced by our store base expansion from 96 stores to 176 stores, net sales growth from $335.7 million to $638.0 million and average net sales per store ranging from $3.7 million to $3.8 million between fiscal year 2010 and fiscal year 2014.”
Going forward, Ollie’s said it plans to build on the 22 and 23 new stores it opened in 2014 and 2013, respectively, with plans for 25 to 30 stores this year. Long-term, the company has identified suitable locations to expand its store base to 950 locations with the company’s existing distribution centers in York, Pa. and Commerce, Ga., capable of service up to 400 of the locations.
The Georgia facility opened last April. Ollie’s is led by Mark Butler who serves as chairman, president and CEO and co-founded Ollie’s in Mechanicsburg, Pa., in 1982.
The company is coming off a solid first quarter performance in which sales increased. 20.9% to $162.5 million and same store sales increased 8.8%
German grocer seeks a Lidl slice of Aldi’s market
U.S. consumers have more options for grocery shopping than ever before. But German discount grocer Lidl, aiming to emulate the U.S. success of the growing Aldi chain, says it will “create a unique experience for American consumers that will be unlike anything else in the market.”
Lidl says it plans to invest $202 million to establish operations in the United States, including a $77 million investment in its U.S. corporate headquarters in Arlington County. Brendan Proctor, president and CEO for Lidl US, made the announcement alongside Virginia Governor Terry McAuliffe after meeting with leaders of the company at Lidl’s international headquarters in Neckarsulm, Germany.
“We are excited to take this important step to launch Lidl’s expansion into the United States and look forward to introducing American consumers to a different type of shopping experience,” Proctor said. “Our philosophy is simple: we are focused on offering customers top quality products at the most competitive pricing in convenient locations. We plan to build on the foundation that has made Lidl so successful in Europe, while creating a unique experience for American consumers that will be unlike anything else in the market.”
Across the United States (and Europe), Aldi has carved out a strong market position and attained shopper loyalty as bargain grocery shopping has become more popular since the recession.
The Schwarz Group, owners of Lidl, are the fourth largest retailer in the world, operating across more than 26 counties and generating more than $100 billion in sales every year. Lidl operates nearly 10,000 stores in 26 countries throughout Europe.
Lidl markets offer customers fresh meat, produce and bakery items, as well as a wide selection of household goods, at the low prices.
“We want to thank Governor Terry McAuliffe, as well as the teams in Arlington and Spotsylvania, who recognized Lidl’s potential and worked with us to bring Lidl to the area. We are honored to work with this incredible team of professionals who have laid the groundwork for Lidl’s success in the United States,” Proctor said.