Coronavirus latest »

Quick guide to Beacon technology from a retail perspective

How much do they cost?

The beacons themselves currently cost in the region of £20 – £25 each, but it’s likely the unit cost will reduce substantially over a relatively short period of time. There are different models emerging where some providers who offer the beacons offer them on a low unit cost per month basis and some are offering additional software to manage the beacons. Crucially, businesses must also factor in the cost of a bespoke app that needs to be configured to respond to the unique signal the beacon emits. This could be a relatively low cost if the app offers simple functionality, but could require more investment if the app offers sophisticated functionality such as the full shopping experience or indoor navigation for example.

How are retailers/wholesalers using them in store?

Many businesses such as retailers and wholesalers are currently deploying beacon technology as pilot initiatives. 2014 was coined as the “year of the beacon”, but it has probably panned out as the “year of the pilot beacon”. The technology is still in its infancy and it seems sensible to test it in a controlled manner, so we believe we are likely to witness full production deployments in major businesses from 2015 onwards.

How might they be used in the future and how widespread will their use become?

Beacon technology refers to just one tool or approach that is referred to under the wider concept that is known as Location Based Services. Location Based Services can offer the consumer a tailored and relevant experience to the environment they are in, so this offers a huge opportunity to retailers or wholesalers who opt to use the technology   In practice, someone who has downloaded an app may receive a welcome message as they arrive or leave a store. This experience can easily become more tailored or relevant to the customer as the message may also be accompanied by information related to in-store offers that the consumer is interested in based on their shopping history, it could also vary depending on the time of day. Different notifications may alert the customer to relevant products, offers or services as they navigate around store, or they could be presented with a feedback form as they exit store for example.

Beacon technology is gaining major traction and in many ways this is being led by retailers, but is also being used in many other business settings such as enhancing events, museums or leisure attractions and even health and safety procedures.

Why have the big supermarkets been slow to embrace them?

The technology has only been available since the beginning of this year, so it’s not surprising we are only witnessing pilot activity within major businesses in the sector. We are seeing a major shift in terms of consumer behaviour who are becoming more familiar and comfortable with using their smartphones to improve many aspects of their lives including purchasing products or services.

Consumers have also become more demanding in terms of the experience they expect from apps, so it is important that any notifications they receive remain relevant to them, otherwise there is a real risk the consumer will delete the app and move onto to an alternative.

What are the potential pitfalls that beacon adopters need to be aware of?  

There are a several issues adopters need to consider, not least as the technology is still in its infancy. RNF digital has been trialling many different beacon options over the last six months which have ultimately proven to be unreliable and it has taken considerable research and development activity to identify robust offerings that work alongside a well designed app.

Adopters also need to be wary of hardware providers that do not offer a full product life cycle and it is still difficult to identify potential partners who are adopting a realistic roadmap of development which can support your business or customers needs, meaning it becomes imperative that businesses align themselves to a technology partner that understands the area.

Most importantly of all, the consumer experience needs to be at the forefront of any new offerings in this area, as the danger is that by firing annoying or irrelevant notifications to their device the app will be quickly deleted. It is also important that the “opt in” and “opt out” mechanisms relating to Location Based Services on the app remain clear and straight forward in order for the consumer to make an informed decision about whether to utilise the service.