Beacon technology and its impact on retail

* 3 min read

Beacon technology is an interesting proposition and one that has been trialled by a few retailers in recent years. Back in June 2014 it was announced that Regent Street was set to become the first shopping street in Europe to introduce beacons and the subject was a hot topic of conversation within Sun Branding Solutions innovations team. At that point the technology had certainly become more grown-up, but we still had some reservations about its implementation. So, were our concerns valid? And how might beacons impact on consumer experience as it develops further?

Understanding beacon technology

The technology works by way of beacons communicating with a smartphone app via Bluetooth. In the instance of Regent Street, the beacons are positioned in various stores, which can then send alerts to shoppers to inform them of discounts, offers and promotions. 

Initial concerns

Following the announcement for the technology be to rolled out on Regent Street, a key concern amongst the team was that with so many shops in close proximity, shoppers would be bombarded with too many messages as they walked past.

In addition, we questioned whether the service would be agile enough should retailers want to provide different offers or information at varying times of the day and that creating their own points of difference through a single app might be difficult. Would shoppers be happy to be contextualised only by their location?

Finally, the team worried that shoppers constantly looking down at their smartphones to view the offers would have a negative impact on the ebb and flow of pedestrian traffic on Regent Street, which can be bit crazy at the best of times. 

In practice

Just before Christmas BBC Click’s Spencer Kelly reviewed the Regent Street app. Having spent 15 minutes walking down the 1 mile strip with the app enabled, the presenter was pinged only 5 times, despite the fact that over 100 retailers on Regent Street have beacons installed in their storefront. 

The reason that the number of offers received was so low is because the app has the ability to build a user profile. When the user first activates the app they are greeted by a series of 40 brands, which they are asked to either like or dislike. From this information the app can then decide which brands and retailers that the user is likely to be interested in.

This development immediately alleviated most of our concerns, with targeting ensuring that consumers aren’t overwhelmed by offers, are interested in the ones that they do receive and thus pedestrian traffic continues to flow.

Enhancing consumer experience

As the technology develops further it could have a huge impact on consumers’ shopping experiences – perhaps most notably in supermarkets. Both Tesco and Asda have already trialled beacons in a handful of their stores during 2014. As it stands, neither have plans to implement the technology on a wider scale just now, with Tesco stating that customers were not ready for the technology. 

However, with beacons offering the opportunity for supermarkets to highlight items that are on special offer, or reduced as they are nearing the end of their shelf life, it is likely that we will see more beacons in the not too distant future. 
Supermarkets could utilise a similar system to that on Regent Street, with consumers identifying brands that they like and dislike to create a unique profile. 

It could even be that the app can be linked to a loyalty card, allowing offers to be targeted around items that the customer has previously bought. 

Whilst the innovations team’s initial concerns surrounding beacons have been alleviated, there is still one big question to be answered as the technology matures further and becomes more commonplace. Namely, will we need to download an app for each supermarket, street or shopping centre? Or will there be one app that is capable of integrating all shopping destinations? If the latter, we believe that beacons will become increasingly popular with consumers. Less so if users are required to install an app for every shopping destination. 

We’ll certainly be keeping a close eye on how retailers utilise beacons over the next few years and the influence they have on consumer behaviour.