By: Danny Bradbury

You're planning an elaborate meal, and you’re at the supermarket wondering where to find that elusive ingredient. Now, imagine this: a mobile phone app tells you exactly where you are in the store, on an aisle-by-aisle map. It directs you, turn-by-turn, to the right place. It even tells you what other deals are nearby along the way. It's like having a GPS and a personal shopping assistant in your shopping cart, and in some retail outlets, it's happening right now.

For years now, companies have been building detailed digital maps of the world and helping us navigate our way around them with our mobile phones. Now, small electronic devices are helping us navigate the next frontier in geolocation – the great indoors. Retailers are using these tags, known as beacons, to find out exactly where customers are in-store, and take their relationship with shoppers to the next level.

Beacons are small, low-powered wireless Bluetooth devices that communicate with an app on a shopper’s smart phone. The beacon can tell when the phone is nearby, locating the customer.

Taking the customer relationship to the next level

Beyond maps, beacons can help unlock new possibilities for retailers. One benefit involves analyzing shoppers’ paths through a store, and their ‘dwell time’ in each area, to better plan customer routes through the aisles and help optimize product placements.

More than that, though, beacons can give retailers a way to extend their relationship with the customer while inside the store. The trick for retailers is to try and get customers to use their mobile apps so that they can interact with beacons on their visit. With lots of apps competing for user attention, it takes a user experience for shoppers to give space to a retailer’s own app and to open it while in store. The information delivered to customers must be valuable and relevant.

Special offers are a popular option for customer engagement among beacon-enabled retailers. Drugstores are using this technology to display lock screen notifications for customers when they approach select scores, and to push coupons based on their purchase history.

Others have married beacons with shopper contests (a concept often called 'gamification'), giving prizes to visitors as they wander through the store. As they pass beacons, visitors would receive a push message with a prize, such as a gift code. When tied to shopping events and holidays, the process encourages customers to register in advance, download the retailer's app, and stay in stores longer.

By communicating with the smart phone app, a beacon can also activate loyalty programs specific to a certain product category or even brand. Smart brands are using the technology to push more than just product reminders. Some food brands have suggested recipes for nearby in-store products to passers-by, for example.

Will beacons deliver enough value to broader retailers to make the technology worthwhile? Market watchers expect the technology to take off. In 2014, shortly after beacons were introduced, the market for them in the U.S. stood at just $7.9m, according to Grand View Research. In 2016, that had risen to $109.9m, and the company expects growth to accelerate exponentially in the next few years.

The technology is getting easier to install – many beacon solutions are now available built directly into LED lighting – but the proof will be how imaginatively and sensitively retailers use them. Discounts and coupons are the biggest draw for customers that opt into beacon technology, followed by loyalty rewards, and faster checkout options in stores that know where you are and what you’re buying, according to Business Insider,

Here’s an important fact, though; 30 percent of customers said they’d never use beacon technology, reports Business Insider. The biggest turn-off? Privacy, and concerns over being tracked. Retailers and customers alike stand to reap big rewards from beacons – but in this fast-moving technology space, building brand trust is a key part of the equation.

About the Author 

Danny Bradbury has been writing about technology and business since 1989. His clients have included the Financial Times, the Guardian, and Canada's National Post.

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