UK retailer House of Fraser announced in August that it will introduce beacon-equipped mannequins in its Aberdeen store to provide customers with a more engaging retail experience. When a customer with an enabled smartphone app is within a 50 metres of the mannequin, the beacon sends a signal providing them with useful information: details about the clothes and accessories the mannequin is wearing, the price, where the items can be found within the store and links to purchase the items directly from the retailer’s website.

Beacons are a type of a low-cost, micro-location-based technology that use Bluetooth low energy (BLE 4.0) for communicating with beacon enabled devices and this isn’t the first time we’ve seen them in use. Waitrose also trialled the technology to push discounts and offers in its Swindon store, while fashion brand Michael Kors announced plans to integrate beacons into its flagship London store when it opens next year. Further afield, ICA and Coop – two of the largest supermarket chains in Sweden – have officially said they are exploring beacons in order to make communications in the supermarkets more relevant.

This technology has enormous potential to enhance the shopping experience, making it quicker and easier for customers to access the information and products they are looking for, or provide special offers or discounts to loyal shoppers. It can also provide retailers with invaluable data about their customers’ shopping habits as well as the activity of their staff, allowing them to make improvements to the store layout by identifying store flow, maintaining service standards and operations that will benefit both customer and retailer.

For many years, near field communication (NFC) was considered to be the technology that would deliver such data to retailers and help them track how customers behave in-store. With NFC having reached certain limits, beacons are now poised to be the next step in delivering on this valuable promise.

But what’s so special about them? For a retailer, there are several reasons why beacon technology is proving attractive.

First, there’s potential beyond the store. House of Fraser’s mannequins are helping to boost engagement with customers who are already inside, but beacons could help get them through the door in the first place. A beacon in a window display could be used to beam promotional information to people as they pass by. They could even be placed in bus stops, street adverts or tube stations to direct customers towards a specific shop before they go anywhere near it.

Beacons can also help a retailer recognise, reward and understand its best customers, increasing loyalty and building a stronger relationship with them. They can be used to track how many times a customer visits a shop, the departments where they spend the most time (to determine which displays are most effective) and the number of promotions/vouchers redeemed in order to monitor conversions. The technology also has the potential to let a retailer know when its most profitable online customers are present so staff can recognise and treat them accordingly.

Beacons could be used to keep track of staff efficiency. They can monitor how often and for how long members of staff engage with customers to help improve customer service training and track sales conversion rates. In addition, beacons could send alerts to members of staff when a task (eg checking if an area of heavy traffic needs re-stocking) needs to be carried out, monitor how long each should take, and identify how staff split their time between the stock room and shop floor. Using beacon technology, retailers are also able to track vendor activity, monitor deliveries and ensure vendor compliance.

But in order for the implementation to be a success, retailers need customers who want to use them. The main barrier to the potential success of beacon technology is the fact that customers have to voluntarily download and install a smartphone app for it to work, third party or the brand’s own. Although there is potential for beacon apps that cover an entire street or mall, most retailer apps are likely to be unique, meaning that they will be in competition with other high street names. While customers may be happy to download an app for a couple of retailers, they might not want to download an app for every shop they visit.

To overcome this, retailers need to educate customers about the benefits this technology offers and demonstrate the unique benefits they wouldn’t get otherwise. One option for retailers is to integrate beacon technology with popular third-party shopping apps such as PayPal or PriceChecker. This way, retailers can get their message across to customers without them having to download another app, but the challenge to make the customer want to establish a relationship remains.

While the introduction of beacon technology poses various challenges, if retailers offer a genuinely beneficial and contextually relevant experience to customers, they will benefit from enhanced engagement and far greater insight into in-store footfall and customer and staff behaviour. Although NFC and to some extent radio-frequency identification (RFID) technology have made similar promises in the past, the widespread uptake of smartphones and the fact that mobile devices are playing a more important role in the shopping experience means that beacon technology is likely go mainstream in the next few years.

Steven Skinner is senior vice-president of retail practice at Cognizant

More like this

• Apple iBeacons: what are they and what do they mean for retail?
• Meet the shop assistant of the future
• It’s personal: how technology will change the way we shop

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