Retail industry SOS: Can Bluetooth beacons save the day?

What's the best strategy for merchants deploying them?

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These are tough times for most brick-and-mortar stores. Although online sales are still only about 7% of total retail sales, online sales are growing about three times faster than in-store sales. Plus, the way consumers interact with retail stores is changing: People increasingly use mobile phones to locate stores, check whether items are in stock, and compare prices. If brick-and-mortar stores want to prosper (or even just survive), then they must adapt to the new always-connected environment.

Fortunately, a simple yet powerful tool has emerged that could help retail stores up their game. Bluetooth beacons don’t do much; they merely broadcast the same short message over and over. However, when Bluetooth beacons are used in tandem with smartphones and Web content, they bring places and objects to life. Specifically, Bluetooth beacons enable merchants to provide smartphone users personalized shopping experiences and self-service options. That empowers merchants to maximize sales, reduce costs and cut down on theft.

The biggest question confronting retail store merchants planning to deploy Bluetooth beacons is: What’s the best strategy? There are several components to an in-store beacon strategy. Should merchants try to engage every smartphone user who walks in the door, or focus on a specific group? What’s the best way to get shoppers to opt in and to keep them from opting out? How can merchants get the biggest bang for their beacon bucks? How should beacons be deployed physically? Finally, do Bluetooth beacons pose security risks and, if so, how can they be managed?

I’ve reached out to people who work day-in and day-out on these issues and here are my conclusions about the best ways to use Bluetooth beacons in retail stores.

Bluetooth beacons should be employed to deepen relationships with existing customers rather than attempt to engage with everyone. Acquiring a new customer can cost 10 times as much as keeping an existing customer. Therefore, a store merchant’s top priorities should be enhancing the shopping experiences of its best customers and learning more about their likes and behaviors.

According to Omer Artun, CEO of predictive marketing cloud company AgilOne, Bluetooth beacons should be managed like loyalty programs. The best way to get customers to join and use loyalty programs, and to keep them from dropping out, is to periodically reward them with things that are genuinely valuable, such as discounts, giveaways and invitations to special events. One great thing about Bluetooth beacons is that they can be used in combination with loyalty programs, automatically issuing rewards whenever a program member visits the store, and enabling them to redeem rewards instantly.

Merchants will get the most out of Bluetooth beacons by targeting customers who have installed their branded apps. Branded apps give merchants greater control and a more complete picture of customer behavior.

There is also a role for shared apps and ad exchanges such as those offered by Swirl Networks. They can be used to acquire new customers and advertise merchants’ apps — often in conjunction with beacons operated by a third party such as a mall owner.

Bluetooth beacons should be deployed to create distinct interaction zones. In theory, multiple beacons can be used to pinpoint a shopper’s location. But people experienced with the technology point out that interference, noise and transmission delays make pinpoint-locating impractical. Companies that specialize in enabling consumers to locate products within individual stores agree. Point Inside, whose StoreMode platform is used by Target stores, recommends avoiding overlapping coverage by configuring beacons to transmit with minimal power. Aisle411, who provides product maps for Walgreen's stores, believes beacons should be used along with other technologies (such as magnetic fingerprinting and dead-reckoning) to track and interact with shoppers.

Since Bluetooth beacons should primarily target existing customers, security is absolutely essential. Security adds complexity and can reduce battery life, but these are worthwhile tradeoffs. Because most Bluetooth beacons can be configured over-the-air, it’s imperative to prevent vandals and competitors from reconfiguring them. Merchants should assign different passwords to different beacons, periodically change the passwords, and monitor Bluetooth frequencies for suspicious activity. Rogue beacons, which could be used to hijack customers, are an even bigger risk. Beacon supplier Gimbal has been at the forefront in developing secure beacons that address this risk.

Can Bluetooth beacons revitalize retail store sales? Both online and brick-and-mortar stores are continuing to evolve. Online stores are adding physical presence through the use of lockers and drones, while physical stores are enhancing their online presence through apps and now beacons. Retail store merchants must take the time to learn the best ways to employ beacons. Bluetooth beacons are going to be an essential tool for delivering superior shopping experiences and leveraging big data to engage shoppers in ways that drive sales.

Copyright © 2015 IDG Communications, Inc.

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