Tech Watch: Beacon technology gains momentum

In early December, Apple delivered a giant software update, not just to its iPhones and iPads, but to its 254 U.S. retail stores. The company had quietly activated a feature called iBeacon that, with permission, could send notifications to an app on shoppers’ phones while they moved about Apple’s stores. Unlike previous methods of in-store […]

Matthew Braga March 27, 2014

In early December, Apple delivered a giant software update, not just to its iPhones and iPads, but to its 254 U.S. retail stores. The company had quietly activated a feature called iBeacon that, with permission, could send notifications to an app on shoppers’ phones while they moved about Apple’s stores.

Unlike previous methods of in-store messaging, iBeacon-enabled apps can tell where a customer is inside the store, whether just walking through the door or hovering around the cash register. They’re smart enough to know that, if a customer has previously looked at hard drives in a shopping app, perhaps they might appreciate a gentle reminder when they pass the accessories section of the store.

Beacon technology is garnering a lot of attention in the retail space. On the analytics side, it has the potential to help retailers understand customers much better than before – the frequency with which they visit versus how often they make a purchase, say. For consumers, beacon technology (there are a number of players in the space) can enhance existing loyalty and rewards offerings by acting as a bridge between a customer’s home or online shopping experience and their behaviour in-store.

For the moment, it’s hard to say just how much traction the technology is gaining in Canada. Major retail experiments being conducted by Apple, Macy’s and American Eagle are currently U.S.-only, and depolyment statistics are hard to come by in both markets. But many of the lessons being learned in the U.S. could easily apply here as well, and Canadian businesses are certainly getting in on the ground floor.

Antoine Azar, co-founder of consulting firm Thirdshelf, for example, has been working with smaller clients such as LXR & Co., a Montreal-based vintage high-end luxury retailer, on deploying iBeacon technology. Thirdshelf demonstrated a full-sized, connected concept store featuring iBeacon at the Dx3 digital marketing conference earlier this month.

David Dougherty, co-founder of the Toronto-based consulting firm Kinetic Café, told Marketing that his company is already designing an iBeacon-enabled “store of the future” for an unnamed Canadian retailer in One World Trade Center that’s set to debut in March 2015.

“In an ideal scenario, there’s a greeter at the door who asks you if they can help with anything,” explains Alexis Rask, the chief retail officer of Shopkick, whose company develops beacon apps and hardware for clients. “But that’s all gone away. It’s very expensive to employ and it’s very difficult to scale across every shopper.”

A common misconception is that iBeacon is actually a piece of hardware when, in fact, it’s just the name of an Apple software feature that can communicate with iBeacon certified hardware. Apple isn’t actually making any beacon hardware itself. Rather, more than 200 million of the company’s more recent generation iOS devices can be configured to act as beacons receivers, as is the case at Apple’s stores.

That leaves much of the work to other companies, such as Shopkick – and other beacon upstarts Estimote and Nomi, and Qualcomm’s Gimbal technology – to develop beacon hardware of their own. These beacons are really just cheap, tiny, low-powered standalone Bluetooth radios that can communicate with mobile devices. The idea is that retailers can place one or more beacons in various places around a store that deliver notifications about sales, deals or directions when a shopper is nearby. Beacons can broadcast anywhere from a few inches to hundreds of feet away, and last years on a single battery.

Beacon deployments, however, are still very much in their infancy. Shopkick counts Macy’s and American Eagle amongst clients using its own shopBeacon hardware, and Rask expects her company to be in “thousands” of national chain stores in the U.S. by the end of the first quarter (the company does not operate in Canada yet).

“They’re really using the beacons as a way to amplify the experience for the guest and to deliver messaging at the right moment to help facilitate that shopping experience,” says Rask of her clients.

Apple, Estimote and Shopkick all declined to share statistics or figures about their deployments, though Shopkick claims to boast the largest deployment of dedicated beacon hardware, if you don’t count Apple’s use of iPhones and iPads.

However, Shopkick’s Rask would share her optimism about the technology’s future. “The costs to entry are relatively low and the benefits to participate are relatively high.”