Global insight: US retailers deploy Apple's iBeacon in-store technology

This story was originally published in Planet Retail's IT & Supply Chain newsletter on Thursday 9 January. Article by Frauke Vor dem Berge (pictured below) and Sarah Herrlein.

Every bricks and mortar retailer strives to gain as many insights into shopper buying behaviour as possible. This is especially true when it comes to the time customers spend in stores before they actually purchase. For this purpose, technologies such as video surveillance have already been proven worthwhile and have helped physical retailers make up some leeway with their online peers when it comes to customer behaviour analysis.

However, through interacting with shoppers' smartphones, retailers now have a tool able to not only locate customers on the shop floor, but also an ideal instrument to communicate directly to shoppers and offer them location-specific content. This week, Safeway and Giant Eagle in the US have been the first grocers to deploy Apple's new iBeacon in-store geolocation technology in Seattle, San Francisco and Cleveland. So far, only Apple itself, along with US department store operator Macy’s, has been using the new technology.

Shoppers, who download InMarket's Mobile to Mortar application, can receive deals, rewards and reminders of shopping list items when visiting Safeway or Giant Eagle outlets. To facilitate this, the grocers have mounted small plastic transmitters on the outlet's walls which uses Apple's iBeacon Bluetooth Low Energy signalling standard to detect customers entering and/or browsing the store.

With existing shopper data immediately to hand, retailers are not only able to identify high-spending customers the moment they enter the store, but can also pinpoint their exact location in-store and send personalised promotions. What's more, with an increasing surge in demand for shopping behaviour analysis across channels, retailers can benefit hugely from the fact that smartphones are the vital link connecting in-store and online customer activity. Retailers can also help shoppers find their desired items through an in-store navigation function. A self-scanning feature can also be added, use of which would provide highly valuable data about point of purchase decisions, too.

However, retailers deciding to gather insights in this way need to carefully consider the tricky issue of data privacy. First, they need a well-defined strategy on how to communicate the use of the technologies to shoppers. One method, for example, could be by offering an opt-in scheme. As the example of Nordstrom – which last year abandoned a shopper tracking pilot amid bad publicity – demonstrates all too clearly, poor or non-existent communication can leave you hugely exposed to a negative backlash.

Secondly, retailers must be clear about data ownership. Entrusting a third party vendor – who may well also work for a competitor - with such valuable information, might not be a wise idea. It seems more likely that businesses will want to avoid those that are gathering – and selling - shopper insights across competitive retailers. Instead, many will opt to go down the admittedly more costly route of building their own app and attendant technology infrastructure.

Looking ahead, 2014 will surely see many more retailers installing iBeacon or similar solutions, given the technology's relatively low installation costs and ease of deployment. The fact that iBeacons are not only compatible with iOS but also with Android devices will drive further proliferation of the solution. However, even though smartphones will doubtless play an increasingly important role in shopping behaviour analysis, they cannot be expected to wholly replace other already well-established shopper-tracking technologies. It seems more likely they will be used as a complementary asset to tools such as video analytics which still offer inherent benefits for which there is no substitute.

Helen Slaven, managing director of Planet Retail, will be presenting a session on 'Global Trends & Forecasts 2014 – Drivers of Change in International Retail' as part of the RBTE 2014 conference programme.