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Retail industry SOS: Can Bluetooth beacons save the day?

These are tough times for most brick-and-mortar stores. Although online sales are still only about 7% of total retail sales, online sales are growing about three times faster than in-store sales. Plus, the way consumers interact with retail stores is changing: People increasingly use mobile phones to locate stores, check whether items are in stock, and compare prices. If brick-and-mortar stores want to prosper (or even just survive), then they must adapt to the new always-connected environment.

Fortunately, a simple yet powerful tool has emerged that could help retail stores up their game. Bluetooth beacons don’t do much; they merely broadcast the same short message over and over. However, when Bluetooth beacons are used in tandem with smartphones and Web content, they bring places and objects to life. Specifically, Bluetooth beacons enable merchants to provide smartphone users personalized shopping experiences and self-service options. That empowers merchants to maximize sales, reduce costs and cut down on theft.

The biggest question confronting retail store merchants planning to deploy Bluetooth beacons is: What’s the best strategy? There are several components to an in-store beacon strategy. Should merchants try to engage every smartphone user who walks in the door, or focus on a specific group? What’s the best way to get shoppers to opt in and to keep them from opting out? How can merchants get the biggest bang for their beacon bucks? How should beacons be deployed physically? Finally, do Bluetooth beacons pose security risks and, if so, how can they be managed?

I’ve reached out to people who work day-in and day-out on these issues and here are my conclusions about the best ways to use Bluetooth beacons in retail stores.

Bluetooth beacons should be employed to deepen relationships with existing customers rather than attempt to engage with everyone. Acquiring a new customer can cost 10 times as much as keeping an existing customer. Therefore, a store merchant’s top priorities should be enhancing the shopping experiences of its best customers and learning more about their likes and behaviors.

According to Omer Artun, CEO of predictive marketing cloud company AgilOne, Bluetooth beacons should be managed like loyalty programs. The best way to get customers to join and use loyalty programs, and to keep them from dropping out, is to periodically reward them with things that are genuinely valuable, such as discounts, giveaways and invitations to special events. One great thing about Bluetooth beacons is that they can be used in combination with loyalty programs, automatically issuing rewards whenever a program member visits the store, and enabling them to redeem rewards instantly.

Merchants will get the most out of Bluetooth beacons by targeting customers who have installed their branded apps. Branded apps give merchants greater control and a more complete picture of customer behavior.

There is also a role for shared apps and ad exchanges such as those offered by Swirl Networks. They can be used to acquire new customers and advertise merchants’ apps — often in conjunction with beacons operated by a third party such as a mall owner.

Bluetooth beacons should be deployed to create distinct interaction zones. In theory, multiple beacons can be used to pinpoint a shopper’s location. But people experienced with the technology point out that interference, noise and transmission delays make pinpoint-locating impractical. Companies that specialize in enabling consumers to locate products within individual stores agree. Point Inside, whose StoreMode platform is used by Target stores, recommends avoiding overlapping coverage by configuring beacons to transmit with minimal power. Aisle411, who provides product maps for Walgreen’s stores, believes beacons should be used along with other technologies (such as magnetic fingerprinting and dead-reckoning) to track and interact with shoppers.
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Since Bluetooth beacons should primarily target existing customers, security is absolutely essential. Security adds complexity and can reduce battery life, but these are worthwhile tradeoffs. Because most Bluetooth beacons can be configured over-the-air, it’s imperative to prevent vandals and competitors from reconfiguring them. Merchants should assign different passwords to different beacons, periodically change the passwords, and monitor Bluetooth frequencies for suspicious activity. Rogue beacons, which could be used to hijack customers, are an even bigger risk. Beacon supplier Gimbal has been at the forefront in developing secure beacons that address this risk.

Can Bluetooth beacons revitalize retail store sales? Both online and brick-and-mortar stores are continuing to evolve. Online stores are adding physical presence through the use of lockers and drones, while physical stores are enhancing their online presence through apps and now beacons. Retail store merchants must take the time to learn the best ways to employ beacons. Bluetooth beacons are going to be an essential tool for delivering superior shopping experiences and leveraging big data to engage shoppers in ways that drive sales.

This commentary by Ira Brodsky first appeared at Computerworld. Brodsky is a Senior Analyst with Datacomm Research and is the author of five books about technology. Brodsky focuses on mobile solutions for payments, retail automation, and health care.

Press releases

New Datacomm Research Report:
Bluetooth Beacons Will Spawn $10 Billion Market by 2020

Disposable Beacons Will Create Explosive Demand for Software and Services

June 2, 2015 – St. Louis, Missouri – Bluetooth beacons are changing the way people shop, work, and play by linking places and things in the physical world to the Internet. However, beacon sales are only a small part of the opportunity. The big money will be made building beacon ecosystems. That is one of the conclusions of Datacomm Research Company’s new 127-page study, Bluetooth Beacon Business Opportunities, 2015-2020.

“We identified thirty-two different markets for Bluetooth beacons cutting across diverse applications including shopping, manufacturing, maintenance, and advertising,” said Ira Brodsky, author of the report. “All of the indicators suggest that Bluetooth beacons will be very successful. Many vendors are betting that Bluetooth beacons will play a leading role in revitalizing retail store sales. Some have found compelling applications in areas such as facilities management and mining. Others believe that Bluetooth beacons will help consumers keep track of keys, remotes, children, and the elderly,” he added.

Bluetooth Beacon Business Opportunities, 2015-2020 includes an Executive Summary describing the opportunities and challenges in three key areas: retail shopper engagement, asset tracking and maintenance, and the consumer mass market. There are chapters focusing on why indoor positioning is hot, the diverse strategies of leading vendors such as Apple and Google, and technology trends in retail marketing. The report contains 29 charts and figures. More than 50 early adopters and 100 vendors are briefly profiled.

Additional highlights from the report include:

  1. Bricks-and-mortar stores must make dramatic changes in order to survive and prosper given the rapid growth of online sales. Bluetooth beacons are essential to a retail store automation strategy that promises science-based shopper interaction, leaner staffing, and more effective anti-theft measures.
  2. The strategies of leading vendors are in flux. Apple’s iBeacon approach currently dominates the beacon market. Google’s UriBeacon concept is complementary but it urgently needs support from leading browsers. Facebook and Samsung have identified unique strategies, but their commitment is unproven.

Datacomm Research Company is a leader in tracking, analyzing, and forecasting emerging technology markets. Bluetooth Beacon Business Opportunities, 2015-2020 is available for immediate delivery in PDF format and sells for $490.00. A corporate-wide license is available for $1,290. The report may be ordered from the firm’s website at datacommresearch.com or orders may be faxed to (314) 667-3010. Visa, Master Card, American Express, and PayPal accepted.

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Press releases

New Datacomm Research Report:
Restaurant Chains’ Mobile and Online Revenue Will Triple Within Five Years

Retailing Increasingly Demands Dual Online and Physical Presence, Integrated Marketing

May 20, 2014 – St. Louis, Missouri – You can’t download your dinner, but you will order food, pay checks, and do much more with your smartphone. That is one of the conclusions of Datacomm Research Company’s new 118-page study, Good Food and Drink and Connected Technology, 2014-2019.

“The restaurant business is going digital,” said David Strom, co-author of the report. “Online ordering is generating billions of dollars of business for chains including Pizza Hut, Domino’s, and Papa John’s. Mobile payments account for a significant percentage of Starbucks’ revenue. A growing number of restaurant chains offer electronic gift cards and rewards. And chains such as Chili’s and Applebee’s are deploying tablet computers to all of their tables,” he added.

“The top restaurant chains’ use of connected technology is an important case study for the entire retail industry,” said Ira Brodsky, the report’s second author. “It’s increasingly clear that in order to prosper bricks-and-mortar retailers must enhance their online presence and online retailers must enhance their physical presence. Integrated marketing is more ongoing and powerful.”

The new Datacomm Research study takes an in-depth look at how restaurant chains are using websites, social media, mobile apps, and self-service tablets to deliver superior customer experiences. The report examines dozens of the top restaurant chains, identifying some of the best and worst examples of how they are using consumer-facing connected technology. The authors make specific recommendations about using digital marketing tools to increase sales, customer retention, and operating efficiency.

Good Food and Drink and Connected Technology, 2014-2019 includes an Executive Summary describing how connected technology is changing the restaurant industry and ultimately all retailing, and forecasting revenue from online ordering, mobile payments, and digital gift and reward cards through 2019. There are chapters on restaurant business trends, website designs, social media engagement, mobile apps, and digital tools for customer interaction. The final chapter profiles nearly 50 technology solution providers—from Altametrics to Ziosk. The report contains 49 tables and figures.

Additional conclusions contained in the report include:

  1. Consumer-facing connected technology is taking off in the restaurant chain business. Revenue from online ordering, digital gift and loyalty cards, and mobile payments will soar to $90 billion by 2019. No retailer can afford to ignore this trend.
  2. The report shows how restaurant chains can improve the information content, functionality, and overall quality of their websites. For instance, responsive web designs enable access from a wide variety of devices. However, restaurant chains must never lose sight of the fact that the best measure of their website is how well it promotes their food and dining experiences.
  3. Social media is a powerful new channel for interactive advertising and market research. The report explains how restaurant chains can achieve greater success by better allocating social media resources, monitoring how people respond, and fine-tuning their social media programs.
  4. Most restaurant chain mobile apps don’t work reliably and merely duplicate information and features found on the restaurants’ websites. The report points the way to mobile apps that are better designed, tested, and maintained.

Datacomm Research Company is a leader in tracking, analyzing, and forecasting emerging technology markets. David Strom is an expert on network and Internet technologies and has written and spoken extensively on topics including voice over IP, convergence, email, cloud computing, network management, and Web services for the past 25 years. Ira Brodsky has written dozens of reports on new technologies and markets, and has assisted clients around the globe defining new products, developing competitive strategies, and influencing government policymakers.

Good Food and Drink and Connected Technology, 2014-2019 is available for immediate delivery as a PDF document and sells for $1,990.00. A corporate-wide license is available for $3,490. The report may be ordered from the firm’s website at datacommresearch.com or orders may be faxed to (314) 667-3010. Visa, Master Card, American Express, and PayPal accepted.

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