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Why iBeacons Intrigue Retailers

BY Dan Berthiaume

iBeacons, the Apple iOS 7 technological feature that uses low-frequency Bluetooth transmissions to help mobile devices track their position relative to stationary beacons, are getting quite a bit of attention from retailers and the IT vendors who serve them. Each beacon has a unique ID that lets mobile devices tell different beacons apart.

What is grabbing the attention of retailers is not so much that devices can obtain individualized information from beacons, but that beacons can also obtain individualized information from mobile devices. Placed in stores, iBeacons can also tell retailers quite a bit about who is shopping and what they are looking for. Here are three specific reasons iBeacons are a new hot topic among retail technology professionals.

Immediacy
A recent study from in-store mobile marketing platform provider Swirl shows that 77% of consumers would be willing to share their smartphone location data as long as they received enough value in return. Receiving value means avoiding irrelevant offers flooding their texts or emails.

iBeacons offer retailers the opportunity to obtain immediate location and buying preference data from opt-in customers who visit their stores. As a customer who is part of a retailer’s loyalty program walks past an iBeacon in a certain aisle, they can be sent a personalized offer to purchase an item one aisle over that complements something they bought last week. This type of targeted, timely convenience can enhance customer satisfaction and loyalty while also increasing the breadth and depth of data retailers can collect about them.

Simplicity
iBeacons operate with a great deal of simplicity. The customer provides the most important piece of hardware, their own mobile device. This allows retailers to instantly and effortlessly know who is entering their store and where they are located, without having to use employee-based tablets or intrusive check-in procedures.

In addition, the beacons themselves are small and inconspicuous enough that they can be easily placed throughout the store without disrupting the customer experience. Retailers have the challenge of providing shoppers a personalized, seamless experience in stores that connects to and in many cases mimics their digital experience, while maintaining a smooth flow of browsing, selecting and purchasing products. iBeacons help retailers meet this challenge.

Utility
iBeacons offer many potential uses to retailers. While the majority of attention has been focused on the applicability of iBeacons to targeted, time-sensitive marketing, they offer retailer other possibilities, as well. For example, iBeacons can help retailers determine how individual shoppers are traveling their stores, where they are stopping, where they are avoiding, etc. This data can then be amalgamated and used to determine at a higher level what demographic groups are coming into the store and what differences in may exist in where and how they conduct their shopping experiences. Knowledge is power, and those little beacons hold a lot of potential power indeed.


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S.Wolpers says:
Mar-27-2014 10:54 am

iBeacons – Fad Or Trend? The Use-Cases For Retail
Based on a series of interviews for a planned omni-channel application, I put together a slide-deck that lists the challenges and opportunities that the use of beacon-based tracking technology holds for retailer – feedback is very welcome: iBeacons – Fad Or Trend? The Use-Cases For Retail And Omni-Channel Solutions

S.Wolpers says:
Mar-27-2014 10:54 am

Based on a series of interviews for a planned omni-channel application, I put together a slide-deck that lists the challenges and opportunities that the use of beacon-based tracking technology holds for retailer – feedback is very welcome: iBeacons – Fad Or Trend? The Use-Cases For Retail And Omni-Channel Solutions

S.Gurley says:
Mar-26-2014 05:30 pm

More Information on iBeacons
While I like the your article "Why iBeacons Intrigue Retailers", perhaps your readers would benefit from having more information about iBeacon and BLE. If they are interested, they can go to Mobile Payments Today to download a white paper and companion infographic that explains iBeacon, BLE and NFC in greater detail. The white paper is entitled "iBeacon/BLE vs NFC Debate: Now The Truth".

S.Gurley says:
Mar-26-2014 05:30 pm

While I like the your article "Why iBeacons Intrigue Retailers", perhaps your readers would benefit from having more information about iBeacon and BLE. If they are interested, they can go to Mobile Payments Today to download a white paper and companion infographic that explains iBeacon, BLE and NFC in greater detail. The white paper is entitled "iBeacon/BLE vs NFC Debate: Now The Truth".

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J. Crew Q4 sales up, but profit drops

BY CSA STAFF

Although fourth-quarter sales at J. Crew increased, the retailer saw profit drop 42% in the quarter amid higher costs.

Net income fell to $5.92 million in the quarter, down from $10.2 million in the year-ago period.

Revenue increased 6.7% to $686.2 million. Retail store sales rose 5% to $438.6 million and direct sales jumped 10% to $238.1 million

Same-store sales, which include direct sales, increased 3%. Excluding a calendar shift, comparable-store sales increased 4%.

Gross margin fell to 36.8% from 38.4%. Overhead costs rose 4.5%.

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REAL ESTATE

Hip Check

BY Jeff Green

I recently attended the 2014 SPECS (Store Planning, Equipment, Construction Services) conference in Grapevine, Texas, and came away with some fascinating food for thought. The event, which is produced by Chain Store Age, celebrated its 50th anniversary this year.

I was particularly struck by a presentation I attended entitled Retail Redefined: Cool Stores Ahead of the Pack. The session was put together by Interbrand Design Forum, moderated by Chain Store Age editor Marianne Wilson, and presented by Tom Kowalski and Scott Smith, Interbrand Design Forum’s VP of design and chief marketing officer, respectively. The presentation covered the future of brick-and-mortar retail, identified critical issues and priorities that need to be addressed going forward, and focused on the importance and influence of Millennials in that evolutionary process.

The role of the Millennial generation is hardly a new topic, but what engaged me was the way the presentation honed in on the ramifications of Millennial influence, drawing a direct line between the demographic and cultural importance of the generation and the specific steps that brick-and-mortar retailers will need to take to adapt.

Consider these eye-opening numbers: Millennials (those born between 1980 and 2000) will make up a population of approximately 80 million consumers by 2020. That group, which currently spends around $600 billion a year on retail, will increase its purchasing power to an estimated $1.4 trillion a year over the next six years. That figure will represent about 1/3 of all retail sales in 2020. In other words, Baby Boomers and GenX are passing the baton, and Millennials are in the process of becoming the big spenders.

With that in mind, it makes sense for retailers to begin to think about how to appeal to this savvy generation. Millennials may be the first truly digital generation, but, as Cool Stores points out, studies have shown that they actually prefer brick-and-mortar shopping, and can be extremely brand loyal if courted by the retailer. What they want is access, convenience (flexible return options and access to real-time product availability), and, most of all, experience. Mr. Kowalski and Mr. Smith concluded, correctly to my mind, that retailers need to continue to work to become more experiential, to keep moving to smaller and more efficient store formats, and to maintain traction in the face of online encroachment by maximizing both the sales and the experience available through all shopping channels.

My favorite part of the presentation were the visuals: examples of some of the trendier, and more engaging retail environments that are geared toward Millennials. I found some of them appealing, and some of them bizarre, but all of them interesting. I walked away from the Cool Stores presentation impressed by the degree to which some innovative brands are experimenting with new designs and environments to enhance the customer experience.

That said, I couldn’t help but notice that most of the examples in the presentation were international stores. Some were international brands here in the U.S., but most of them were from abroad — including some brands that I suspect few Americans have even heard of. It got me wondering if U.S. retailers are somewhat behind the curve when it comes to design and engaging the Millennial customer. On the other hand, these new design concepts are clearly not geared to Baby Boomers (that being my generation) — some of them I found confusing, or even off-putting. Consequently, one concern I have about these “cool stores” is whether or not they will translate to other generations beyond the Millennials. Can retailers appeal to Millennials without alienating other demographics? Along those same lines, many of the retail environments featured in the presentation clearly display an edgier, more urban chic in their design principles — which makes sense, as Millennials tend to live in more urban environments. While these new store designs may fit in New York City, they’ll likely be out of place in Peoria.

Whatever is next for brick-and-mortar, it’s clear that experiential elements and heightened attempts at consumer engagement are on the minds of retailers today. The consequences for those brands at the opposite end of the engagement spectrum can be dire, a fact reinforced by a recent study by research firm Brand Keys that I read about in WWD. According to the study, struggling brands like Sears, Kmart and American Apparel are among the lowest ranked in terms of customer engagement. As the piece points out, in what might be the understatement of the year, there is a “strong correlation between financial performance and engagement scores at both ends of the survey.” While it remains to be seen just how “cool” the stores of tomorrow need to be to engage Millennials, it’s a great sign for brick-and-mortar’s future that these efforts are underway.

That’s my take on it, but I’m just a lowly Boomer after all. What do you think about the emerging generation of “cool” stores? Are U.S. brands lagging behind their international peers in engaging Millenials? Share your perspective in the comments below or email me at [email protected] to continue the conversation.


Click here for past columns by Jeff Green.

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