For some time now, manufacturers and retailers have looked for the best ways to leverage smartphones as part of the in-store shopping experience. Experiments with QR codes and other programs have failed to yield the kind of mass market adoption that was originally envisioned.
So why should Apple’s (AAPL) recent entry into this field, iBeacon, be any different? For starters, iBeacon leverages Bluetooth technology, comes standard in Apple’s iOS 7 operating system, and is backward compatible down to the iPhone 4. It requires nothing more than upgrading the phone’s operating system. If you have an iPhone, you can simply choose to turn on iBeacon, and you’re in business.
For retailers, there is a cost, but it’s relatively minimal. Beacon transmitters have a range of 70 meters (or 15,394 square meters) and you can get three for $99. You can “light up” your store for, at most, a few hundred dollars without replacing your existing hardware and point-of-sale systems.
What sets Apple’s approach apart from earlier efforts is that consumer adoption is built in from day one. But that’s not even the most interesting part—at least not from a retailer’s perspective. It’s what iBeacon can do to enhance the shopper marketing experience.
Let’s start with the basics. With iBeacon, retailers (and manufacturers) can now provide detailed walking directions to the precise location in the store where a product is located. Digital circulars, including coupons, can now be transmitted—not to mention updated—in real time. And of course, as privacy advocates will point out, you can track the real-time traffic patterns by day, by minute, and by shopper profile.
This is where things start to get interesting. Imagine having access to the majority of your customers’ shopping patterns each and every time they enter your store. What kinds of insights could you gleam from knowing how long your customers hover in an aisle or over a particular product line before they walk away or place an item in their shopping baskets? It’s as if you just added Google (GOOG) Analytics to your physical store—the real-life equivalent of being able to analyze page views and click throughs. Except that you’re analyzing retail traffic patterns, hover zones, and purchase patterns mapped against information and offers provided throughout the shopper’s in-store journey.
Let’s assume your customers have given you permission to link their loyalty card to their mobile phone (in exchange for offers and a better in-store experience). You now have their past shopping histories combined with real-time proximity in the store. You know what they bought on the last several visits, and you can begin to model, predictively, what each person is likely looking to buy in that aisle today. Think of the digital equivalent of “behavior targeting” meets in-store shopper marketing. When you start to overlay simple third-party data, such as today’s weather, you can begin to see entirely new patterns emerging and, in turn, direct your management team to contract or expand inventory of individual products based on these patterns.
The winners will be the early adopting retailers who embrace iBeacon technology while continuing to “test and learn” the best ways to enhance the shopper marketing experience.