The Buzz About Beacons
The retail industry is abuzz about beacons. Since Apple announced its support for iBeacons, stores and malls have been hurrying to evaluate how Bluetooth beacons can help them deliver innovative shopping experiences, analyze and understand their customers, and most importantly bring in more sales.
Unfortunately, most beacons on the market are of very limited value in the convenience store industry. While department stores and supermarkets can use beacons to offer promotions and services to customers as they move between zones in the stores — from the fruit section to the dairy section of a supermarket, or from the men’s department to the shoe department of a department store — most convenience stores are not big enough to break up into distinct beacon zones.
Even in bigger stores, many store owners have been frustrated by the need to design their location systems around zones of their store. Store owners who want to send a promotion to a customer standing in front of the watermelon, but not to those standing in front of the apples, are frustrated by most beacon systems working in terms of bigger zones. Why can’t beacon systems work the way GPS systems do outdoors?
The reason for these challenges comes down to technology, particularly the level of accuracy at which the technology is able to determine location. Today’s beacons are based on a system called Bluetooth Low Energy, or BLE for short. BLE beacons use radio waves similar to those used by Bluetooth headsets and hands-free kits to detect and determine the locations of Bluetooth-enabled cell phones as they move around.
The challenge is that BLE can only measure locations to within a few meters. This is accurate enough to distinguish a fruit shopper from a dairy shopper in a big supermarket, but cannot distinguish a customer shopping for soda from one shopping for chips a few feet away. This is particularly challenging in convenience stores, in which large zones are virtually impossible. But the same problem affects larger stores as well.
THERE IS HOPE
That’s not to say beacons cannot be valuable in convenience stores. A single beacon can enable a store’s mobile app to notice when a regular customer walks by or enters the store, and either send a coupon to their phone or notify the cashier to greet the person by name. For stores that take orders by phone or Internet, a single beacon of this sort can also be used to have someone’s order ready for them when they approach the counter.
Most of the cited benefits of beacons, however, are currently not available to small convenience stores because Bluetooth simply isn’t accurate enough.
Luckily, new technologies coming to market now are making indoor location positioning accurate enough for convenience stores to reap a lot more benefit. Ultra-wideband (UWB) radio systems are designed to be much more accurate at measuring location than Bluetooth and other current technologies. This is because the radio waves in a UWB system are designed specifically to support accurate location measurement.
UWB systems are not just accurate to within a few meters, they are accurate to within 10 centimeters. This is accurate enough to distinguish someone standing in front of the soda from someone standing in front of the chips a few feet away.
Consider the possibilities with that level of accuracy. If someone stands in front of the chips for a predetermined amount of time, indicating they are deliberating, they can be sent a coupon for the more expensive brand of chips (upselling). Alternatively, someone shopping for chips can be sent a coupon for salsa found in the next aisle.
If a system is not accurate enough to determine whether the customer is looking at chips or soda, these coupons would be essentially non-targeted. But with high accuracy, such coupons can reach the customers that are likely to be interested. This accuracy can enable location systems to work in convenience stores, and also to deliver unprecedented levels of service in larger stores as well.
Accurate location positioning is also a boon for analytics. Suppose you knew exactly which products were looked at by customers who leave the store without purchasing? What could you do with the knowledge that most of the people who left without buying looked at beer? Maybe use beer as a loss leader? Lower the price, but put it in the back of the store next to high-profit items? Or maybe move the beer off the shelf and onto a stand-up display? Or move it next to the cash register to raise the odds of quick purchases? Whatever you did with that knowledge, it would be valuable to know.
For stores with mobile apps and customer loyalty programs, the benefits are even greater. Imagine knowing not only the purchase history of your regular customers, but also where they dwelled each time they were in the store. A customer might buy four or five items, but if one type of item was regularly the item they stood by and considered, it might be an opportunity to send them a promotion or somehow encourage them to buy the more profitable option.
Owners and managers of convenience stores know how different they are from their bigger-sized siblings such as department stores and supermarkets. With increased accuracy coming to indoor location systems, convenience stores and their customers can benefit from innovative systems that are becoming commonplace in bigger stores.
Knowing exactly where customers are can be the key to knowing where your increased sales will come from.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.