Why large chain retailers like Macy’s are banking heavily on beacons
October 2, 2014
Image Source: The Washington Post
Macy’s, the 156-year-old retail chain, recently announced that it will expand the use of beacons to all of its stores across U.S. This announcement was a follow up on the test run held by the retail chain at it’s flagship stores in New York City and San Francisco, during last year’s holiday shopping season. With more than 4,000 beacon devices planned to power engagement and marketing efforts throughout the retail chain, this rollout is touted to be one of the largest beacon deployments in the retail industry to date.
Many retail experts are of the opinion that, this big bet on beacons is a strong indication of the seriousness with which large chain retailers like Macy’s are taking to localized marketing. This step was a part of the retailer’s efforts to make bigger investments in omni-channel retail technologies ahead of the major holiday shopping season.
Retailers today have realized that brands that fail to embrace omni-channel strategies will soon be at a competitive disadvantage. With technology being ranked as one of the biggest barriers to creating an engaging omni-channel shopping experience for customers, Macy’s decision to adopt beacons is definitely in the right direction.
In fact, one of the best ways to cater to contextual information needs of your customers while bridging opportunities across various offline and online channels is to integrate beacons with your in-store location technology. If you are a retailer looking to leverage beacons to go omni-channel, our recent ebook would be a good place to start with.
Though beacons have been touted as an innovation on the cusp of transforming brick-and-mortar shopping, few retailers have fully embraced it. While Alex and Ani, Duane Reade, American Eagle etc, have already tested it at a limited number of their outlets, Macy’s currently appears to be the largest retailer to be embracing this technology in a big way.
So, the question arises, Why should large chain retailers like Macy’s bank heavily on beacons? Here are a few reasons:
When it comes to providing your customers with a personalized shopping experience, commercial platforms that offer mobile coupon services often face a number of limitations. This is mostly because they lack the ability to customize notifications to the needs and preferences of customers and risk overwhelming shoppers with a wide array of notifications with little thought given to contextualization. According to a recent survey by InMarket, a company that helps brands with beacon implementations, message overload can often nudge customers to delete your app.
Beacons help retailers avoid this by letting them consider crucial factors such as transaction history, previous purchases made, products wishlisted by the customer etc and accordingly trigger contextually relevant deals and offers that are sure to have a great impact on the readiness of the customer to purchase. Thus it helps you ensure that your customers find great value in the notifications delivered on their mobile device.
For example, say a customer just walks into the store, and the app detects that the electric kettle he had favorited is currently available in-stock. Beacons can then trigger notifications informing him about the availability and even direct him to the section where he can have a look at it in person.
According to a recent joint report titled ‘Achieving Big Customer Loyalty in a Small Business World’ by Manta and BIA/Kelsey, 61% of brands reported that repeat customers drive more than half of their revenue, rather than the new ones. And the best way to keep your customers coming back for more, is to offer an engaging customer loyalty program that is well intertwined with everyday needs and preferences of your customers. This is where beacons come into the picture.
For example, say a customer is detected to be standing in the houseware department, right next to the display of KitchenAid mixers. Integrating beacons with your mobile strategy will help you keep track of his/her loyalty points and trigger notifications with an enticing offer on that KitchenAid mixer. Thus intertwining beacon data with your customer loyalty programs will help you engage customers better by offering more relevant deals.
3. Optimize layout of merchandise
Though beacons are popularly known for sending out marketing messages, that’s not the only way towards utilizing this technology to its maximum. These proximity-detection devices also help retailers gain valuable insights into consumer shopping behaviour by recording data such as, the frequency at which they visit the store, departments that they spend most time at, customer dwell time at each beacon and other information. Retailers can then use this information to optimize store layouts and product placement based on navigational patterns.
4. Offer enhanced customer service
Forrester analyst, Sucharita Mulpuru recently said that stores of the future will be more about services and, to get it right, retailers need to create unique experiences that consumers can emotionally connect to. For example, you can use beacons to allow customers to reach out to sales associates for assistance from within an app. Smart stores could then use the customer’s location information to dispatch sales associates to the right department, based on the associate’s expertise. Further, you could also help sales associates get a better idea on how they should approach a customer by relaying important customer information such as items in wishlist, preferences based on Pinterest pins etc to them.
While beacons have stimulated the appetite of retailers world over, there has been a lot of talk about the privacy concerns of beacons, as they rely on consumers offering up their data. According to recent research by Urban Airship, however, most consumers are fine with location tracking and push messaging, with the opt in rates averaging at 62% and 51% respectively. Therefore, as long as your app delivers valuable content, consumers will find it worthwhile to share personal data. We have addressed few other security concerns in our blog here.
If you are planning a beacon pilot, take a look at Beaconstac, that includes everything you need to get started. Using Beaconstac you can set up your own campaign, without a developer’s help!