San Francisco: Retailers and consumer goods groups are turning to beacon technology in a bid to make shopping in bricks-and-mortar stores more like ecommerce, as they try to connect online behaviour with offline sales.

Beacons enable targeting based on a person’s precise location, meaning a department store could alert a shopper to a new collection from Michael Kors when she is near women’s clothes, or a laundry detergent brand could send a coupon to customers standing in front of its product. The more granular level of location detail compared with GPS data has also made the devices popular with hotel chains, museums and sports stadiums.

At stores including Lord & Taylor, Walmart, Urban Outfitters and Sephora, shoppers can opt to receive targeted messages on their smartphones offering personalised coupons, alerting them to sale items that may be of interest based on past purchases, or prompting them to share photos on Instagram of clothes they are trying on.

“The promise of beacons for retailers is you can finally tie an online persona to an offline persona,” says Vincent DiBartolo, vice-president of technology at Big Spaceship, a privately owned digital advertising agency. “They are no longer satisfied knowing we’ve got this much traffic on our website and this much value in sales. They want to know: this person was on my website and then they went to my store.”

The Hudson’s Bay Company, the Canadian department store that owns the upmarket chain Lord & Taylor, has installed beacon technology at all of its locations in the US and Canada. “As a bricks-and-mortar retailer, we’ve been intrigued by [the question:] how do you leverage the fact that people are so engaged with their mobile devices 24 hours a day?” says Michael Crotty, chief marketing officer.

Beacons communicate with smartphone apps over Bluetooth, allowing retailers and brands to send pop-up alerts to customers’ devices and collect valuable data on how shoppers move through stores.

Business Insider Intelligence predicts that the technology will be used at 85 of the top 100 US retailers and influence $44 billion (Dh161.5 billion) in retail sales in 2016.

Lord & Taylor and Urban Outfitters, the youth apparel chain, are working with Swirl, a beacon technology provider that recently raised $18 million from backers including media group Hearst, SoftBank Capital, the venture capital group, and Twitter, in the messaging service’s second-ever venture investment.

Twitter’s involvement may point to broader advertising possibilities. Swirl says that its platform allows retailers to sell ads within their apps to brands that want to target consumers at the precise moment that they are shopping for specific items.

Hilmi Ozguc, Swirl’s chief executive, says that may help retailers — and beacon companies — to capture more of the $100 billion that research group eMarketer expects will be spent globally on mobile ads in 2016.

“With the advent of beacon-powered technology, a good chunk of the spend on mobile advertising will go towards in-store sales on the simple logic that over 90 per cent of sales happen in brick-and-mortar stores,” he says.

The hope is that retailers will know whether a customer is a first-time visitor or is loyal shopper and tailor its messages accordingly in person. “The technology helps unlock additional context about the user or the shopper,” says Brett Leary, vice-president of mobile at DigitasLBi, the digital marketing company of Publicis Groupe.

There are hurdles to beacons gaining wider adoption among consumers. To receive messages, shoppers have to download an app, have Bluetooth turned on and elect to share their location.

Concerns over privacy forced an outdoor advertising company to remove beacons from pay phone kiosks in New York last year. “Consumers are a little suspicious of them,” DiBartolo says. “Outside of loyalists it’s a novelty still. The brands haven’t figured out how to make it part of people’s habits.”

It is also not certain that beacons will become the primary technology for connecting digital and real-world commerce. For example, data from credit card purchases can be matched to mobile phone identities, allowing retailers and brands to track customers’ habits without installing beacons.

PayPal, the electronic payments company that is being spun off from eBay this year, is staking its own claim on bridging the online-offline gap by making it easy for people to use retail apps to pay through its own platform, with Apple Pay or with other mobile wallets.

“The difference between online commerce and offline commerce is blurring and disappearing,” says Dan Schulman, PayPal’s incoming chief executive.

With more than half of customers using their mobile phones while shopping in a physical store, he adds, “it’s not a far cry to see them use it all the way and check out through that mobile device”.


Financial Times