Mobile phones have already reshaped online shopping, and the physical retail store may be next. Bluetooth Low Energy (BLE), otherwise known as Beacons, is being introduced to hundreds of retail locations to track every move and contemplation of shoppers. After Apple's incorporation of the iBeacon with the iPhone 5S, the technology is set to attract increased interest from retail brands hoping to drive profits from brick-and-mortar stores.
Retail shopping experiences in general are ripe for a shakeup. Technology companies have begun to emerge that specialize specifically in the area of in-store technology for tracking mobile device signals. Euclid Analytics is such a firm. Its software system allows retailers to analyze shopping patterns from foot traffic to gender breakdowns of shoppers and even ideal placement of product displays.
Founder and CEO, Will Smith, explains that Euclid Analytics is, "trying to do for retailers what Google and Amazon have done online forever, improve the shopping experience through data." In upcoming years it is likely that such technology will be implemented on a wider basis. What is still up in the air, however, is how such tools will generate ROI for brands while preserving the privacy and security of customers.
With Beacon technology built directly into the iPhone 5S and the ability to use any wireless signal as a Beacon, even from a feature phone, entrepreneurs are jumping at the chance to introduce software for in-store analytics. A great deal of the software offered attempt to replicate the online tracking tools many use for assessing websites.
Another example is RetailNext, which describes itself as "a market leader in big data solutions for brick-and-mortar challenges." Its analytics software uses security camera feeds and mobile device signals to track multiple aspects of a store. Products, staff, shopper browsing patterns, and store layouts can be assessed and monitored.
American Apparel turned to RetailNext to replace traffic management and loss prevention systems. Stacey Shulman, CIO of American Apparel, stated that the retailer used the software to "identify low-converting locations for concentrated attention and drive increased sales in these stores." As software for in-store beacon tracking proliferates, brands will have an array of options to increase insight into store performance.
From a franchise perspective, small tweaks and alterations across hundreds of stores can result in millions of dollars in transactions. Implementing BLE and other forms of tracking across a fleet of stores can provide more detailed and accurate assessments. Apple is set to use iBeacons to track shoppers and assess layouts in 2014. Marketing efforts especially can benefit from this approach to brick-and-mortar shoppers.
When a customer enters a store, personalized notifications can be sent to the customer's device with offers and coupons based on transaction history and even selection of apps. If a customer has a significant amount of mobile games, perhaps send a discount for an iPhone gaming controller. Or if a user abandons a shopping cart on Apple's website with an iPad, the retail store can retarget them as they physically browse.
Although Apple is a massive organization implementing iBeacons, small and medium-sized businesses can also benefit. Philz Coffee implemented Euclid Analytics within its store in Berkeley, California. A main goal was to better understand potential foot traffic, repeat visitors, and first timers. Although the technology seems intrusive, every mobile device has a Unique Device Identifier (UDID) rather than a name to be monitored, which helps to maintain a certain aspect of customer anonymity.
Privacy and security will be a major concern for shoppers. Nordstrom beta-tested tracking software from RetailNext to the uncomfortable surprise of shoppers. After seeing a warning sign detailing how the store was tracking phones, one consumer wrote on Facebook: "way over the line." Brands can also use the software to track products in order to refine shelf organization and store layouts.
Cliff Crosbie, SVP of managed services at Prism Skylabs (another company specializing in retail store tracking technology) stated that his company "is not looking at individuals" instead it is "looking at patterns and trends in the space." Such services also do not solely track shoppers. In fact, many stores depend on the analysis and tracking of product location and display placement.
When a shopper is in front of a specific display that the shopper perhaps viewed online, retailers can send a relevant notification. While this ability is attractive to brands, a major challenge will be to avoid spamming shoppers inside of a store. Consumers are already bombarded with an onslaught of advertising messages online and will be turned off by excessive mobile activity inside a store.
Online tracking in the real world
Similar in many ways to the traditional method of having a cashier collect phone numbers, zip codes, and emails, such tracking software will take customer data collection to another level. American Eagle Outfitters is already implementing in-store tracking in over 100 stores via Shopkick, another company that specializes in in-store services. By having direct access to pervasive information about customers, retail brands can emulate online shopping in a physical setting.
Editor's note: The upcoming iMedia Commerce Summit: The Future of Shopping will be held in Salt Lake City June 23-25. Learn more and request your invitation here.